Meta was dealt a significant blow last week when being found guilty by European Union regulators of effectively forcing users to accept personalized ads. Required changes for the parent of Facebook and Instagram may significantly limit access to data to sell such ads in the region.
The social media giant was also assessed a $414 million fine.
Regulators found that Meta’s terms of service, which includes language that in effect requires user’s consent to deploy their data for targeted advertising as a contractual condition for using Facebook and Instagram, violated the E.U.’s landmark data-protection law, General Data Protection Regulation (G.D.P.R.).
Meta has three months to outline how it will comply with the ruling with no guidelines provided on how to do so. If forced to provide an opt-in only option to share data for targeting purposes, a large number of reluctant users would restrict Meta and other platforms’ ability to show them ads based on what they click and watch within those platforms’ own apps.
Personalized ads are believed to make up the bulk of Meta’s revenue.
Meta has estimated Apple’s privacy features introduced in 2021 cost the company $10 billion in lost sales in 2022 with surveys suggesting a majority of users blocked tracking in Meta’s apps. In a Wired column, columnist Morgan Meaker wrote on the ruling, “Many believe the company has only one option — to introduce an Apple-style system that asks users explicitly if they want to be tracked.”
No federal data privacy law exists in the U.S., but E.U. rules could set a precedent globally.
In a blog post, Meta said it plans to appeal the ruling. Citing “Contractual Necessity” as a legal basis, Meta argued that “providing each user with their own unique experience — including the ads they see — is a necessary and essential part” of the personalized Facebook and Instagram experience.
In an op-ed last September in The Drum, Claire Noburn, Google’s ads privacy lead, similarly said an ad-supported web model “isn’t only vital to advertising success — it’s essential for the future of the web.”
She stressed that a ban on personalized advertising and shift to “contextual” advertising, or tailoring ads based on context, “won’t pay for the web everyone wants.”
