Most tech companies have had a merely torrid 2022, but Meta’s has been truly miserable.
In April 2021, Apple took a big bite out of the social media giant’s ads business – which accounts for about 98% of its total revenue – with the launch of ‘App Tracking Transparency’ on iOS.
The new feature allowed iPhone and iPad users to prevent – with a single click – apps from tracking their activity across other companies’ apps and websites to serve up personalised ads.
That tweak alone was expected to slash Meta’s 2022 revenue “on the order of $10 billion”, the company said in February, after its stock tanked 23% in a single day.
While the fallout from Apple’s move is still playing out, there’s little doubt it has delivered a swift uppercut cut to Meta’s once-invincible ads business. The only consolation has been that Meta can still track its users’ activity within Facebook or Instagram to show them targeted ads.
Now, that too has come under threat in Europe.
A new threat emerges: On Tuesday, The Wall Street Journal and Reuters reported that soon, Meta may only be able to run ads based on personal data with users’ consent, citing a confidential decision by the European Data Protection Board (EDPB).
Facebook and Instagram have allowed users to opt out of personalised ads for years. These ads are based on data collected from users’ behaviour and choices across other apps and websites.
The EDPB ruling could prevent Meta from delivering targeted ads based on users’ activity within their own apps as well.
How it began: The regulator’s decision was in response to complaints filed by privacy campaign group noyb when Eupope’s data protection law – the General Data Protection Regulation (GDPR) – came into effect in 2018.
Noyb said in its complaint that the company was in violation of the GDPR as it didn’t give users the choice not to share their data for targeted advertising.
Europe’s data protection law generally bars companies from forcing users to hand over their personal information to use their services, but there are a few expectations to this – such as when that information is necessary to execute a contract. Amazon, for instance, needs to know your address to deliver what you ordered.
Meta, it turned out,used this provision to continue collecting users’ data when the GDPR came into force. In effect, it was claiming that Facebook and Instagram users were in a contract with Meta to receive targeted ads.
Responses: “Instead of having a yes/no option for personalised ads, they just moved the consent clause in the terms and conditions. This is not just unfair but clearly illegal. We are not aware of any other company that has tried to ignore the GDPR in such an arrogant way,” Schrems said in a statement.
Meta released the following statement after the WSJ report was published: “This is not the final decision and it is too early to speculate. GDPR allows for a range of legal bases under which data can be processed, beyond consent or performance of a contract. Under the GDPR there is no hierarchy between these legal bases, and none should be considered better than any other. We’ve engaged fully with the DPC on their inquiries and will continue to engage with them as they finalise their decision.”
What’s next? The EDPB’s rulings don’t directly order Meta to change its practices, the Wall Street Journal said. Rather, they call for Ireland’s Data Protection Commission to issue matching orders within a month. Meta, which has its European headquarters in Ireland, would have to comply.
The company can, of course, appeal the rulings. But if it is unsuccessful and a significant number of European users do end up opting out of targeted ads, Meta could be in for more misery.
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