Pay or Play: The Legal Battleground Around Paying with Personal Data
The digital landscape has introduced a new dilemma affecting organizations and users worldwide: the pay or play model. This practice, where platforms force users to choose between paying for privacy or free usage with extensive data collection, stands at the center of one of the most complex legal discussions of this decade. For organizations dealing with data management and compliance, it’s essential to understand why this model is under such heavy legal fire.
What is the Pay or Play Model Exactly?
The pay or play model, also known as the “Consent or Pay” system, confronts users with a seemingly simple choice when using online services. When someone signs up for a platform like Facebook or Instagram, a screen appears with two options:
Option 1: Free access where the user gives consent for extensive processing of personal data, including tracking of online behavior, location data, and preferences, all used for personalized advertising.
Option 2: Paid access where users pay a monthly fee (often between €10-15) for access without personalized advertisements and with limited data collection.
This model presents itself as transparent and user-friendly – after all, the choice lies with the user. However, the reality of this “free choice” is much more complicated than it appears.
The Economic Drivers Behind the Model
For platforms like Meta, the pay or play model isn’t a random choice. Personalized advertisements generate significantly higher revenues than general advertisements. When a platform knows exactly what a user is interested in, where they live, and what their purchasing behavior is, advertisers can pay much higher amounts for access to this target group.
A general advertisement for sports shoes yields, for example, €0.50 per click, while a personalized advertisement for the same shoes, shown to someone who recently searched for running shoes, can yield €3.00 per click. This multiplication factor explains why platforms are so determined to maintain their data collection model.
The Legal Foundations: Why the EDPB Intervenes
The EDPB Ruling: A Legal Milestone
On April 18, 2024, the European Data Protection Board (EDPB) published a groundbreaking ruling in Opinion 08/2024. This document, prepared by Europe’s top privacy experts, declared the pay or play model fundamentally contrary to the GDPR.
The EDPB based this ruling on six crucial considerations that every organization working with data management must understand:
1. Personal Data as Commodity: A Fundamental Problem
The first and most fundamental problem with the pay or play model is that it treats personal data as a commodity. By linking an explicit price to not processing personal data, this data becomes effectively tradable.
This goes against the core of the GDPR, which considers personal data as a fundamental right that cannot be bought or sold. When a platform says: “Pay €12 per month or we process your data,” privacy becomes a luxury product instead of a basic right.
2. The Illusion of Voluntary Consent
For valid consent under the GDPR, there must be a free choice. The EDPB argues that the pay or play model makes this freedom illusory. Why?
Economic coercion: For many users, €10-15 per month is a significant amount. Families with tight budgets have effectively no choice and are forced to give up their privacy.
Social necessity: Platforms like Facebook are so integrated into social and professional life that “not participating” isn’t a realistic option. Companies communicate via WhatsApp Business, families organize events via Facebook, professionals network via LinkedIn.
3. Unacceptable Harm Through Exclusion
The EDPB recognizes that being unable to participate in these platforms can cause unacceptable social and economic harm. Think of:
- Professionals who lose customers because they’re not active on social media
- Parents who miss important school communication because it goes through Facebook groups
- Entrepreneurs who lose competitive advantage because they don’t have access to social media marketing
Unequal Power Relations: The Reality of Platform Dominance
Large tech platforms have an oligopolistic market position. Facebook has no real competition in social networks, Google dominates search queries, Amazon controls e-commerce. This market dominance means users have no realistic alternative.
In a healthy market, a user dissatisfied with platform A’s privacy practices could switch to platform B. In the reality of 2025, staying away from Facebook often means social isolation, and staying away from Google means limited access to information.
Practical Consequences for Organizations
What Does This Mean for Your Data Management?
Organizations that take data management seriously must understand that the EDPB ruling on pay or play has broader implications for all forms of data processing:
1. Reconsideration of Consent Practices
The ruling emphasizes that genuine choice is essential for valid consent. This means organizations must critically evaluate their own consent mechanisms:
- Do we offer users a realistic choice to use our service without extensive data processing?
- Can users easily and without adverse consequences withdraw their consent?
- Are our alternatives to data processing truly equivalent to the main option?
2. Focus on Legitimate Interest
Now that consent is under pressure, legitimate interest as a legal basis becomes more important. Organizations must conduct a careful Legitimate Interest Assessment (LIA) demonstrating:
- That their commercial interest is legitimate and concrete
- That no less intrusive alternatives exist
- That their interest outweighs the rights of the data subject
- That users are adequately informed and can object
3. Implementation of Privacy by Design
The pay or play debate emphasizes the importance of Privacy by Design. Instead of treating privacy as an add-on, organizations must design their systems with privacy as a starting point:
- Use data minimization: collect only what’s truly necessary
- Implement purpose limitation: use data only for the stated purpose
- Build clear opt-out mechanisms into all processes
- Create transparency through understandable privacy dashboards
The Digital Markets Act: A Second Legal Front
DMA vs. GDPR: Different Weapons, Same Battle
Besides the GDPR, the Digital Markets Act (DMA) plays a crucial role in the fight against the pay or play model. Where the GDPR focuses on individual privacy rights, the DMA targets market power and competition.
Article 5(2) DMA prohibits combining personal data between different services without explicit consent. For Meta, this means Instagram data cannot automatically be combined with WhatsApp data for advertising purposes.
Article 6(10) DMA states that consent must meet GDPR standards, connecting the two regulatory frameworks.
Financial Impact: Why Sanctions Matter
The DMA has significantly heavier sanctioning possibilities than the GDPR:
- Initial fines up to 10% of global annual turnover
- Repeat fines up to 20% of global annual turnover
- Daily penalty payments up to 5% of daily global turnover
For Meta, with an annual turnover of approximately €120 billion, these penalty payments can reach €16 million per day. These amounts are so high that they can actually force behavioral change.
The First DMA Fine: A Precedent
On April 22, 2025, Meta received the first fine under the DMA: €200 million for the pay or play model. More importantly, the European Commission announced that daily penalty payments would follow if the practices continued.
This fine is not only a financial sanction but also a legal precedent demonstrating that Europe is willing to actually act against large tech platforms.
Practical Implementation: What Should Your Organization Do?
1. Audit of Current Practices
Start with a thorough audit of your current data processing practices:
Evaluate consent practices:
- How do you ask for user consent?
- Do you offer realistic alternatives for users who don’t want to give consent?
- Can users easily withdraw their consent without loss of functionality?
Check documentation:
- Are your processing purposes specifically and limitedly formulated?
- Do you have a valid legal basis for each processing activity?
- Are your retention periods justified and documented?
2. Development of Alternative Models
Freemium without data processing: Offer a free basic version that functions without extensive data processing, and a paid version with extra functionalities (not privacy).
Context-based advertising: Instead of personalized advertisements, use advertisements based on the content the user is viewing, without tracking.
Transparent value exchange: If you use data for service provision, make this clear and show concrete benefits for the user.
3. Legal Basis Optimization
Legitimate Interest Assessment: Develop detailed LIAs for all processing activities not based on consent:
- Document why your interest is legitimate
- Show that no less intrusive alternatives exist
- Prove that the balancing test falls in your favor
- Offer clear opt-out possibilities
Consent Optimization: For processing activities requiring consent:
- Use clear, non-legal language
- Make consent granular (separate for each purpose)
- Implement simple withdrawal possibilities
- Regularly check if consent is still current
4. Technical Implementation
Privacy Dashboards: Develop user-friendly dashboards where users can see:
- What data you process from them
- For what purposes this is used
- How long you retain it
- How they can adjust their settings
Automated Privacy Controls: Implement systems that automatically:
- Signal expired consents
- Check retention periods
- Remind users of their privacy settings
- Process opt-out requests
5. Organizational Measures
Privacy Governance:
- Assign clear responsibilities for privacy compliance
- Implement regular privacy impact assessments
- Create escalation procedures for privacy incidents
- Ensure regular staff training
Stakeholder Communication:
- Develop clear communication to customers about privacy changes
- Create processes for handling privacy complaints
- Ensure transparent reporting on privacy practices
The Future of Digital Privacy
What Do We Expect?
The pay or play debate is symptomatic of a fundamental shift in how we think about digital privacy. The era when platforms had unlimited access to user data in exchange for “free” services is coming to an end.
Expected developments:
Stricter enforcement: European supervisors will likely act more aggressively against platforms that don’t offer genuine choice.
Technological innovation: More investment will be made in privacy-preserving technologies like federated learning and differential privacy.
New business models: Companies will need to find more creative ways to create value without extensive data processing.
User awareness: Consumers are becoming increasingly aware of the value of their data and demand more control.
Preparing for the Future
For organizations, this means that investing in privacy-friendly practices is not only legally necessary but can also become a competitive advantage. Companies already working on transparent, user-friendly privacy practices will be better positioned when regulations tighten further.
Strategic recommendations:
- Invest in first-party data: Focus on building direct customer relationships instead of dependence on third-party tracking
- Develop privacy-friendly innovations: Look for ways to create value that respect privacy
- Build trust: Transparency and honesty in data practices become increasingly valuable
- Diversify revenue streams: Reduce dependence on data-driven advertising
Conclusion: Navigating the Post-Pay or Play Era
The pay or play model represents more than a legal discussion – it’s a tipping point in the digital economy. The EDPB ruling and DMA enforcement mark the end of an era when platforms could force users to choose between privacy and access.
For organizations dealing with data management, this means an opportunity to lead instead of react. By implementing privacy-friendly practices now, you create not only legal certainty but also a competitive advantage in a world where privacy becomes increasingly valuable.
The lesson from the pay or play debate is clear: genuine choice is essential for valid consent. Organizations that embrace this principle and build it into their practices will not only achieve compliance but also win the trust of users who are increasingly aware of the value of their privacy.
The battle over the pay or play model isn’t over yet, but the direction is clear. Privacy isn’t a product to sell, but a fundamental right to respect. Organizations that understand this and act accordingly will be best positioned for the future of the digital economy.
RealCob: Practical Compliance in the Post-Pay or Play Era
The pay or play debate demonstrates that modern data protection requires more than just legal knowledge – it demands an integrated approach that combines compliance with operational efficiency. RealCob helps organizations proactively tackle these challenges by translating the complex lessons from this debate into practical action.
With RealCob, you develop transparent consent practices that offer genuine choice instead of false alternatives. The software facilitates detailed Legitimate Interest Assessments (LIAs) and documents alternative processing grounds, so you don’t depend on forced consent. The integrated GDPR and NIS2 modules ensure your data management meets both privacy requirements and cybersecurity obligations.
Through automated retention period signaling, continuous compliance monitoring, and user-friendly privacy dashboards, you create a system where transparency is central. This proactive approach helps you look ahead and prevent problems, rather than solving legal issues after the fact.
Start building a privacy-first organization today that’s ready for stricter enforcement and more critical users. RealCob guides you toward compliance that goes beyond mere legal adherence – it becomes a competitive advantage in a market where trust is the new standard.