Pay-or-Okay systems deliver “North Korean consent rates”

The Pay-or-Okay model adopted across the online news industry and platforms like Facebook and Instagram is “manipulative” and cannot be considered a free choice, a new report from the digital rights group noyb has found.

The report comes as the European Data Protection Board (EDPB), which oversees the implementation of privacy rules in the EU, is considering formal guidelines regarding the use of the model, also known as Consent-or-Pay.

Organizations like noyb, a Vienna, Austria-based non-profit, have long called on regulators to adopt a stricter approach to Pay-or-Okay, which they say violates the bloc’s General Data Protection Regulation (GDPR).

According to the group, Pay-or-Okay does not provide users a genuine choice to refuse tracking, as required by privacy rules, because the alternative is too expensive.

“Right now, users are effectively and unlawfully nudged towards ‘consenting’ to being tracked. The EDPB now has the opportunity to take a clear stance on this issue in its upcoming guidelines,” said Felix Mikolasch, data protection lawyer at noyb.

Last year, the watchdog stated in a non-binding opinion that in most cases, such systems do not give users “real choice.”

The Pay-or-Okay model was first introduced by the Austrian newspaper Der Standard to comply with new privacy laws that were adopted in the EU and quickly spread across the bloc – as well as to countries like the UK that passed similar privacy legislation.

Meta adopted the model in 2023 and took it a step further, making EU users choose between a subscription to access Facebook and Instagram without ads or to consent to tracking.

In June this year, the European Commission warned that Meta could face daily fines of up to 5% of its global revenue unless it revised its Pay-or-Okay model to comply with the bloc’s laws.

The Pay-or-Okay model is now used by hundreds of websites because data protection authorities “still haven’t adopted a consistent EU-wide approach to deal with these systems,” according to Mikolasch.

“They should have agreed on this long ago,” he said.

Economic narrative “false”

Online publishers argue that Pay-or-Okay is necessary to finance quality media, especially when AI-powered search tools increasingly threaten their traffic and revenue.

However, according to noyb's report, some studies show that digital advertising accounts for only 10% of the press's revenue and targeted advertising for only about 5%.

Meanwhile, the group said the cost of the Pay option is “mind-blowing” compared to the advertising revenue.

Research shows that publishers earn €0.24 ($0.28) per user per month from tracking and €3.24 from one paying user in the same period.

Given the “North Korean consent rates” of about 99% to 99.9%, the Pay-or-Okay model only increased the overall income of the press by 0.82% on average, according to privacy advocates.

“While such a minor increase in revenue won’t save the news industry from its economic decline, it will surely kill the notion of freely given consent according to the GDPR in Europe,” noyb said.

It added: “If any system produces consent rates that do not match the true wishes of data subjects, it is manipulative.”