Meta fined $414 million after advertising practices found illegal under EU law
The ruling is one of the most important under landmark EU data protection law and creates a new headwind for the social media giant.< /p>
Meta suffered a major loss on Wednesday that could severely undermine its advertising business on Facebook and Instagram after European Union regulators discovered that it unlawfully forced users to actually accept personalized ads.
The ruling, including a fine of 390 million euros ($414 million), could force Meta to make costly changes to its advertising business in the European Union, one of its largest markets.
The ruling is one of the judgments largest since the 27-nation bloc, home to around 450 million people ts, enacted a landmark data privacy law aimed at restricting the ability of Facebook and other companies to collect information about users without their prior consent. The law came into effect in 2018.
The case hinges on how Meta receives legal permission from users to collect their data for personalized advertising. The company's terms of service agreement - the very long statement that users must agree to in order to access services such as Facebook, Instagram and WhatsApp - includes language that effectively means that users must either authorize the use of their data for personalized ads, or stop using Meta. social media services.
The Irish Data Privacy Board, which serves as Meta's primary regulator in the European Union, as the company's European headquarters are in Dublin, the EU said. authorities had determined that placing legal consent in the terms of service essentially forced users to accept personalized ads, breaking European law known as the General Data Protection Regulation, or G.D.P.R.
>Meta has three months to explain how it will comply with the ruling. The ruling doesn't specify what the company should do, but it could leave Meta users choosing whether they want their data used for such targeted promotions.
If a large number of users choose not to share their data, it would cut off one of the most valuable parts of Meta's business. Information about a user's digital history - such as videos on Instagram prompting someone to stop scrolling or the types of links a person clicks on while browsing Facebook feeds - is used by marketing to deliver ads in front of people most likely to buy. These practices helped Meta generate $118 billion in revenue in 2021.
Judgment puts 5-7% of Meta's overall ad revenue at risk, says Dan Ives , analyst at Wedbush Securities. "It could be a major punch," he said.
The penalty contrasts with regulations in the United States, where there is no no federal data privacy law and only a few of the states like California have taken steps to create rules similar to those in the European Union. But any changes made by Meta as a result of the decision could affect users in the United States; many tech companies apply the E.U. rules globally because it's easier to implement than limiting them to Europe.
L 'E.U. Judgment is the latest headwind facing Meta, which was already struggling with a major drop in ad revenue due to a change Apple made in 2021 that gave iPhone users the option to choose whether advertisers could to follow them. Meta said last year that Apple's changes would cost it about $10 billion in 2022, with consumer surveys suggesting a clear majority of users have blocked tracking. is trying to branch out from social media into the virtual reality world known as the metaverse. The company's stock price has fallen more than 60% in the past year and it has laid off thousands of employees.
The Wednesday's announcement regarding...
The ruling is one of the most important under landmark EU data protection law and creates a new headwind for the social media giant.< /p>
Meta suffered a major loss on Wednesday that could severely undermine its advertising business on Facebook and Instagram after European Union regulators discovered that it unlawfully forced users to actually accept personalized ads.
The ruling, including a fine of 390 million euros ($414 million), could force Meta to make costly changes to its advertising business in the European Union, one of its largest markets.
The ruling is one of the judgments largest since the 27-nation bloc, home to around 450 million people ts, enacted a landmark data privacy law aimed at restricting the ability of Facebook and other companies to collect information about users without their prior consent. The law came into effect in 2018.
The case hinges on how Meta receives legal permission from users to collect their data for personalized advertising. The company's terms of service agreement - the very long statement that users must agree to in order to access services such as Facebook, Instagram and WhatsApp - includes language that effectively means that users must either authorize the use of their data for personalized ads, or stop using Meta. social media services.
The Irish Data Privacy Board, which serves as Meta's primary regulator in the European Union, as the company's European headquarters are in Dublin, the EU said. authorities had determined that placing legal consent in the terms of service essentially forced users to accept personalized ads, breaking European law known as the General Data Protection Regulation, or G.D.P.R.
>Meta has three months to explain how it will comply with the ruling. The ruling doesn't specify what the company should do, but it could leave Meta users choosing whether they want their data used for such targeted promotions.
If a large number of users choose not to share their data, it would cut off one of the most valuable parts of Meta's business. Information about a user's digital history - such as videos on Instagram prompting someone to stop scrolling or the types of links a person clicks on while browsing Facebook feeds - is used by marketing to deliver ads in front of people most likely to buy. These practices helped Meta generate $118 billion in revenue in 2021.
Judgment puts 5-7% of Meta's overall ad revenue at risk, says Dan Ives , analyst at Wedbush Securities. "It could be a major punch," he said.
The penalty contrasts with regulations in the United States, where there is no no federal data privacy law and only a few of the states like California have taken steps to create rules similar to those in the European Union. But any changes made by Meta as a result of the decision could affect users in the United States; many tech companies apply the E.U. rules globally because it's easier to implement than limiting them to Europe.
L 'E.U. Judgment is the latest headwind facing Meta, which was already struggling with a major drop in ad revenue due to a change Apple made in 2021 that gave iPhone users the option to choose whether advertisers could to follow them. Meta said last year that Apple's changes would cost it about $10 billion in 2022, with consumer surveys suggesting a clear majority of users have blocked tracking. is trying to branch out from social media into the virtual reality world known as the metaverse. The company's stock price has fallen more than 60% in the past year and it has laid off thousands of employees.
The Wednesday's announcement regarding...
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