UNITED STATES: The company’s economic model has suffered after finding that Mark Zuckerberg’s Meta empire violated EU data laws by using individualized advertising to target users.
Campaigners claimed that the action might force the owner of Facebook and Instagram to require users to “opt-in” before their data is used for targeted advertisements.
Ireland’s Data Protection Commission (DPC) fined Meta a total of €390 million (£343 million) after the EU’s data authority rejected the company’s argument that users enter into a “contract” with the company’s social media platforms through the terms and conditions they sign, agreeing to receive ads based on their data.
Compiling user profiles from their online behaviour is a key component of the Facebook and Instagram business models, allowing advertisers to target people based on characteristics like their hobbies, purchasing habits, and location.
The DPC initially supported Meta’s legal defence that the “contract” approach did not violate the EU’s general data protection regulation.
Still, it declared on Wednesday that it had to abide by the European Data Protection Board’s binding recommendations, which are made up of representatives from all EU privacy regulators.
However, the DPC noted that it was seeking a court judgment against a further EDPB demand that it looks into all of Facebook and Instagram’s data processing operations. The DPC has regulatory authority over Meta because it has its EU headquarters in Dublin.
The privacy advocacy organization Noyb claimed the ruling was a “major” financial blow to the corporation, relying on advertising for 98% of its $118 billion (£98 billion) revenue in 2021.
Noyb said the decision was made after receiving complaints against Meta. Facebook and Instagram users in the EU will now need to be asked if they want their data to be used for advertisements, according to Max Schrems, the honorary chair of Noyb.
The ruling, which assessed fines of €210 million for Facebook’s GDPR violation and €180 million for Instagram, has given Meta three months to put its data processing activities into compliance. It did not specify how Meta was to abide by the ruling.
After Apple made a privacy modification requiring app developers to ask users for permission to follow their online activities to give them personalized adverts, Meta’s advertising-based revenue model is already under threat.
In October of last year, the company’s shares plummeted following a dismal earnings report in which it signalled a slowdown in advertising. It is also needing help persuading investors to support its multibillion-dollar investment in the metaverse, a theory where the real and virtual worlds merge through augmented and virtual reality.
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