Surveillance capitalism just got a kick. In an ultimatum, the European Union has urged Meta to reform its approach to personalized advertising – a seemingly unremarkable regulatory decision that could have profound consequences for a company that has grown impressively rich, as Mark Zuckerberg once put it, from running ads .
The verdict, which carries a 390 million euro ($414 million) fine, is aimed specifically at Facebook and Instagram, but it’s a huge blow to big tech as a whole. It’s also a sign that GDPR, Europe’s landmark data protection law introduced in 2018, is indeed having teeth. More than 1,400 fines have been imposed since it went into effect, but this time the bloc’s regulators have shown they are willing to adopt the very business model that makes surveillance capitalism, a term coined by American scholar Shoshana Zuboff, tick brings. “It’s the beginning of the end of data freedom for everyone,” says Johnny Ryan, privacy activist and senior fellow at the Irish Council for Civil Liberties.
To understand why, you need to understand how Meta makes its billions. Right now, Meta users opt into personalized advertising by agreeing to the company’s Terms of Service – a lengthy contract that users must accept in order to use its products. In a ruling yesterday, Ireland’s data watchdog, which oversees Meta because the company’s EU headquarters are in Dublin, said bundling personalized ads with terms of service in this way breached the GDPR. The judgment is a response to two complaints, both filed on the day the GDPR came into force in 2018.
Meta plans to appeal, but the ruling shows change is inevitable, privacy activists say. “It’s really asking the entire advertising industry, how are they moving forward? And how are they moving forward to stop these lawsuits that require them to keep changing?” said Estelle Masse, global data protection lead at digital rights group Access Now.
EU regulators haven’t told Meta how to reform its operations, but many believe the company has only one option — to introduce an Apple-style system that explicitly asks users if they want to be tracked.
Apple’s 2021 privacy change was a major blow to companies that rely on user data for ad revenue — particularly Meta. In February 2022, Meta told investors that Apple’s move would reduce the company’s revenue by around $10 billion in 2022. Research shows that a large proportion of Apple users (ranging from 54 to 96 percent according to various estimates) refused to be tracked when given the choice. If Meta were forced to implement a similar system, it would jeopardize one of the company’s main sources of revenue.
Meta denies that it needs to change the way it operates in response to the EU ruling, claiming it just needs to find a new way to legally justify how it processes people’s data. “We want to reassure users and businesses that they can continue to benefit from personalized advertising across the EU across Meta’s platforms,” the company said in a statement.