E.U. Regulator Rules Meta Can't Use App Data for Targeted Advertisements

Decision Could Upend Revenue Streams for Digital Advertising Industry

By
Lyle Niedens
Full Bio
Lyle spent most of the past two decades in a variety of product, communication and financial writing roles with large asset managers and mutual fund distributors, mostly recently as vice president, director of product development with Waddell & Reed/Ivy Distributors Inc. Previously, he spent a decade in senior roles as an editor and reporter with business publications and financial news wires, including Dow Jones, BridgeNewsand Knight-Ridder Financial News. A graduate of the University of Kansas with an M.B.A. and a B.S. in journalism, he lives in Westwood, KS, a suburb of Kansas City, with his wife, Caryl, and their sons, Conley and Pierce.
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Published January 04, 2023
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Key Takeaways

  • Ireland's privacy regulator fined Meta $411 million for violating the E.U. privacy law known as the General Data Protection Regulation (GDPR).
  • The ruling could force Meta to allow users to opt out of data-directed personalized ads.
  • Meta has said it will appeal the ruling.

A European Union privacy regulator fined Meta 390 million euros ($411 million) on Wednesday for violating E.U. privacy laws by sending targeted advertisements to Facebook and Instagram users based on their online activity.

Meta said it will appeal the Ireland Data Protection Commission's fine and the ruling, the latest blow to the firm's traditional business model. If courts uphold it, the decision would hinder the digital advertising industry's revenue stream, requiring Meta and other platforms to allow users to opt out of ads targeting their interaction on platform apps.

The commission said a board representing all EU privacy regulators last month ordered it to issue the ruling. Meta has maintained that its contracts with users allow the ads, but the decision gives Meta three months to halt the practice of using those contracts as justification for the practice.

Another Revenue Challenge

Meta and other platform operators use data collected on their own apps to help advertisers target users based on that information. Analysts estimate that if a significant number of people opted out of receiving ads based on their activity, Meta's advertising revenue could fall by as much as 20%.

The decision marks the latest landmark challenge to Meta's revenue model. In 2021, Apple began specifically asking iPhone customers if they want to prevent apps from tracking their online activity. As more users chose to do so, Meta last year posted the first quarterly revenue decline in its history, and its stock plunged 64%.

Now, a recent class action suit in California accuses the firm of trying to circumvent Apple's "opt out" feature by collecting data from built-in Facebook or Instagram browsers that open when a user clicks on a specific site's Facebook or Instagram page. Meta denies those allegations.

Wednesday's ruling, handed down by the Ireland commission because Meta's E.U. headquarters are in Dublin, portends a protracted legal battle. It also comes after Ireland fined Meta $275 million in November for a data leak that led the personal information of more than 500 million Facebook users to be published online.

Meanwhile, later this year, the E.U. Court of Justice is expected to rule on additional Meta data-collection practices.

Article Sources
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  1. The Wall Street Journal. "Meta Fined More than $400 Million for Serving Ads Based on Online Activity."

  2. Yahoo! Finance. "Meta is desparate to fight back against Apple's privacy changes."

  3. The New York Times. "Meta's Ad Practices Ruled Illegal Under E.U. Law."

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