Data protection and personalized advertising are increasingly clashing, and the „pay or okay“ model is now at the center of a heated debate. This subscription offers users of online platforms two options: either consent to the use of their data for personalized advertising or a paid subscription that turns off this advertising. The approach has caused a stir, particularly since its introduction on Meta platforms like Facebook and Instagram in November 2023, as it raises important questions about the voluntariness of consent and equality of access to data protection-friendly options.

The most important points in brief

• The „Pay or Okay“ model offers users of online platforms a choice between free use with personalized advertising or a paid subscription without advertising.
• The European Data Protection Board (EDPB) has taken a critical stance on the model, as it questions the genuine voluntariness of consent in such constellations.
• The discussion surrounding the subscription model remains open and may require further legal clarification and adjustments.

Background

The debate surrounding the „Pay or Okay“ model focuses particularly on the question of which legal basis is appropriate for the dissemination of personalized advertising. After both contractual performance and legitimate interest were rejected as legal bases by the European Court of Justice (ECJ), the „Pay or Okay“ model is now coming into focus on the basis of consent.

Statement of the European Data Protection Board

The non-governmental data protection organization NOYB, known for its strict stance on data privacy, objected to Meta's model from the outset, arguing that it essentially sets a precedent for a „privacy fee“ that could foster the normalization of privacy trade-offs in the industry.

Shortly thereafter, data protection authorities from Hamburg, Norway, and the Netherlands launched a Initiative, in order to obtain a statement from the European Data Protection Board (EDPB) on the data protection permissibility of „pay or okay“ subscription models. The initiative was prompted by the lack of a uniform European approach to this issue.

In his Statement of 04/17/2024 The European Data Protection Board (EDPB) published its decision, which could mark a turning point for the data protection practices of Large Online Platforms within the European Union.

The EDSA decision explicitly prohibits the use of an unlawful consent mechanism for the processing of personal data for behavioral advertising purposes. The committee argues that the „pay or okay“ model, which requires users to pay a fee if they choose not to be tracked, does not meet the requirements for lawful consent. The decision is based on the finding that a binary choice between agreeing to data processing and paying a fee does not fulfill the criteria for informed and freely given consent. Furthermore, the voluntariness of consent is not guaranteed on large online platforms, as the social pressure to join them—because so many people use them—is so high that no voluntary consent situation exists.

This statement from the EDSA is not just a reaction to specific complaints or individual business models, but also a starting point for a comprehensive discussion about the „pay or okay“ model in various regulatory and legal contexts. The committee has announced its intention to issue further guidelines throughout the year, which will cover both large online platforms and more general areas of application. The core question of whether and how a „pay or okay“ model can meet the legal requirements of free consent remains open and controversial.