European Union regulators have fined Meta, the parent company of Facebook, €390 million ($414 million) for violating privacy laws and prohibited the company from mandating users in the 27-nation bloc to accept personalized ads based on their online activity.
The fines, issued by Ireland’s Data Protection Commission, involve two cases that challenge Meta’s reliance on user data for targeted advertising. Meta plans to appeal the rulings, which could significantly impact its advertising-driven business model. A separate decision concerning Meta’s WhatsApp service is expected later this month.
Meta Under EU Scrutiny
Meta, like other Big Tech firms, is under increasing pressure from the EU’s stringent privacy regulations. The General Data Protection Regulation (GDPR), enacted in 2018, has already led to more than €900 million in fines for Meta across four prior cases. Additionally, EU antitrust regulators have accused the company of anti-competitive practices in classified ads.
The Irish Data Protection Commission, Meta’s main EU privacy regulator due to its regional headquarters in Dublin, levied two fines: €210 million for Facebook-related violations and €180 million for similar breaches involving Instagram.
Background on the Decision
The case stems from complaints filed in 2018 when GDPR came into effect. Before GDPR, Meta sought users’ consent to process their data for personalized ads. However, when the new rules took effect, the company updated its terms of service, requiring users to agree to data processing for ads as a contractual obligation. EU regulators determined this approach violated GDPR.
Although the Irish watchdog initially sided with Meta, it reversed its position after feedback from a board of EU privacy regulators.
The final ruling states that Meta cannot use the “contract” basis to justify personalized advertising on Facebook and Instagram. While Meta has three months to align its data processing practices with GDPR, the decision doesn’t explicitly outline the required changes.
Meta’s Response and Potential Impact
Meta argues that its advertising approach complies with GDPR, expressing disappointment in the rulings. The company emphasized that the decision doesn’t prevent personalized ads but challenges the legal framework for processing user data.
Privacy advocate Max Schrems, who filed the original complaints, called the ruling a potential “game-changer” for online advertising. Schrems noted that users would now have the option to opt out of data use for ads, potentially affecting Meta’s profitability in the EU.
Broader Challenges for Meta
Adjusting its practices to comply with the decision could increase costs for Meta, which is already facing economic pressures. The company has reported two consecutive quarters of declining revenue due to intensified competition, particularly from TikTok, and has recently laid off 11,000 employees amid broader challenges in the tech industry.
This decision could set a precedent for regulating targeted advertising across the EU, leveling the playing field for companies that rely on user consent for data-driven ads.
