EU privacy regulators have decided that Meta, the parent company of Facebook and Instagram, cannot make giving up data for targeted ads a condition of joining the social networks, according to reports published Tuesday in the British newspaper The Guardian. Wall Street Journal And the Reuters. The decision threatens to upend the social media giant’s business model and change the financial foundations of the internet.
Subscribing to Facebook or Instagram means clicking on the privacy policy and consenting to the digital monitoring of social networks for advertising purposes. If you do not agree, you will not have an account. But the European Data Protection Board (EDPB), which is made up of all of Europe’s privacy regulators, issued a series of new rulings on Monday stating that this type of forced consent violates General Data Protection Regulation (GDPR)The European Union’s comprehensive privacy law.
EDPB confirmed that it reached a binding decision on the legality of data collection on Facebook, Instagram and WhatsApp in a press release, but did not release the contents of the ruler to the public. However, key details leaked to the press on Tuesday.
The decision will not only affect Meta. Every company offering targeted advertising operates in much the same way as a social media giant. You can sometimes opt out of having data from other parts of the internet used for social media advertising, but the new ruling seeks to restrict the company from using the data it collects on its sites. private networks. It would be a sea change in how online privacy works.
“The EU regulators’ decision, if upheld, would have a significant impact on Meta’s revenue in Europe, limiting its ability to use information about its users’ activities on the platform in order to sell targeted advertising,” said Debra Ahu Williamson, principal analyst. At Insider Intelligence, in an email. “However, we expect Meta to fight aggressively to defend its business, and it could take months, if not years, before any impact is truly felt.”
Meta did not respond to a request for comment on the ruling.
The ruling does not immediately oblige Meta to change its practices. Instead, the Irish Data Protection Commission is calling for specific orders to be issued within a month, which are likely to include large fines, Reuters reports. Meta will likely appeal the decision as well, which could allow the status quo to continue during litigation.
But depending on how the ruling is implemented, it could mean that Meta and the other companies it owns must obtain genuine, informed consent before they chew through all of your personal information and run ads. What would this look like? It is not clear yet.
When people are offered the option of being tracked online (and still using a particular site or app), they tend to say no. Over the past year, Apple has launched a privacy setting that makes apps ask for permission before they track users, “Ask the app not to track.” The vast majority of people say no, Meta business He took off As a result – the company said it lost $10 billion thanks to Apple’s privacy setting alone. An EU ruling against Meta could lead to a financial crisis for the company, whose share price has already fallen like a rock this year. Meta stock fell 6.79% at the closing bell Tuesday after the news.
But the verdict is likely to be much greater than the meta. Plenty of other companies, from Google to TikTok to smaller players, operate via a similar legal model: approving targeted extensions or using some other platform. It’s unclear how broadly the EU’s rule will apply across the continent, but it’s likely to disrupt one of the foundational models of online business.
The open secret in the tech industry is that a lot of companies, apps, and websites haven’t figured out a way to make money apart from collecting data and targeting ads. If the company can’t use your data, it can still show you “contextual” ads, which are based on the content you’re watching (imagine an ad for Honda in an article about cars). But contextual ads are cheaper than ads tailored from your personal information, and therefore less profitable than the company selling them.
The EU decision only has a direct impact on companies operating in the EU, but it is a sign that governments may finally change their approach when it comes to privacy. So far, lawmakers have been willing to pass privacy rules that make certain data practices more complicated for the business world, but this is the first time a major government body has taken steps to limit targeted advertising altogether.
But the GDPR is the model for privacy laws in the United States and around the world. If this strict interpretation of the law is successful – however you define success – it could point to a more special future.
Update 7/12/21, 12:05 PM ET: This story has been updated with details about a press release from the European Data Protection Council.
“Twitteraholic. Total bacon fan. Explorer. Typical social media practitioner. Beer maven. Web aficionado.”