European Union privacy regulators have ruled that Meta, the parent company of Facebook and Instagram, cannot donate up data for targeted advertising condition of membership in social networksaccording to information published on Tuesday in the the wall street journal and Reuters. The decision threatens to upend the social media giant’s business model and alter the financial underpinnings of the internet.
Although the decision has not been made public, key details were leaked to the press on Tuesday. Jhe decision would not only affect Meta. Every company that serves targeted ads works much the same as the social media giant. Sometimes you can choose to have data from other parts of the internet used for social media advertisingbut the new ruling aims to prevent companies from using the data they collect on their own networks. It would be a sea change in how online privacy works.
“The EU regulators’ decision, if upheld, would have a dramatic impact on Meta’s revenue in Europe, limiting its ability to use information about its users’ activities on the platform to sell content. targeted advertising,” Debra Aho Williamson, a senior analyst at Insider Intelligence, said in an email. “However, we expect Meta to fight vigorously to defend its business, and it could take months or even years before an impact is truly felt.”
Meta did not immediately respond to a request for comment on the decision.
The ruling does not immediately force Meta to change its practices. Instead, it asks the Irish Data Protection Commission issue specific orders within a monthlikely to result in substantial fines, Reuters reported. Meta will likely appeal the decision as well, which could allow the status quo to continue for dispute.
But depending on how the decision plays out, it could mean that Meta and other companies it owns gotta get real and informed consent before chewing up all your personal information and spitting out advertisements. What would that look like? It’s not clear yet.
When you introduce people to a choice of whether to be followed online (and always use some website or app), they tend to say no. Over the past year, Apple rolled out a privacy setting that requires apps to ask permission before tracking users, “Ask app not to track.” The vast majority of people say no, and the business of Meta nose dive as a result, the company said it lost $10 billion due to Apple’s privacy setting alone. One EU decision against Meta could mean a financial crisis for the company, whose share price has already fell like a rock This year. Meta’s stock was down 6.79% at the closing bell on Tuesday following the news.
But the decision is probably far more important than Meta. Many other companies, from Google to TikTok to smaller players, operate through a similar legal framework model: accept targeted ads or use another platform. It is unclear to what extent the EU decision would apply across the continent, but it is possible that one of the foundations e-commerce models could be disturbed.
The tech industry’s open secret is that many companies, apps, and websites haven’t found a way to make money outside of data collection and ad targeting. If the company can’t use your data, they can still show you “contextual” ads, based on the content you’re watching (imagine an ad for Honda in an article about cars). But contextual advertising is cheaper than tailored ads through your personal informationand therefore less profitable for the company to sell it.
A The EU ruling only has a direct effect on companies operating in the EU, but it is a sign that governments may finally be changing their minds on privacy. So far, lawmakers have agreed to pass privacy rules that make certain data practices more burdensome for the business community, but this is the first time a major government body has has taken steps to limit targeted advertisements.
But the GDPR serves as a model for privacy laws in the United States and around the world. If this strict interpretation of the law succeeds – however success is defined – it could portend a much more private future.
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