Just surveillance capitalism got a kick. In an ultimatum, the European Union has demanded that Meta reshape its approach to personalized advertising — a seemingly minor regulatory ruling that could have profound implications for a company that has become impressively wealthy by, as Mark Zuckerberg once put it, serving ads.
The ruling, which carries a €390 million ($414 million) fine, is aimed specifically at Facebook and Instagram, but it is a huge blow to Big Tech as a whole. It’s also a sign that GDPR, Europe’s leading privacy law introduced in 2018, really has teeth. More than 1,400 fines have been issued since enactment, but this time the bloc’s regulators have shown they are willing to adopt the business model that spurs surveillance capitalism, a term coined by American scholar Shoshana Zuboff. “This is the beginning of the end of free data,” said Johnny Ryan, a privacy activist and senior fellow at the Irish Council for Civil Liberties.
To understand why, you need to understand how Meta makes its billions. Currently, Meta users opt into personalized ads by agreeing to the company’s terms of service — a long-term contract that users must accept to use the products. In a ruling yesterday, Ireland’s data watchdog, which oversees Meta because the company’s EU headquarters is based in Dublin, said bundling personalized ads with terms of service in this way violates the GDPR. The ruling comes in response to two complaints, both filed on the day the GDPR went into effect in 2018.
Meta says it wants to appeal, but the ruling shows that change is inevitable, say privacy activists. “It really asks the entire advertising industry: How are they going to move forward? And how do they move forward in a way that ends these lawsuits that require constant change? 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: introduce an Apple-like system that explicitly asks users if they want to be tracked.
Apple’s 2021 privacy change was a huge blow to companies that rely on user data for ad revenue, especially Meta. In February 2022, Meta told investors that Apple’s move would cut the company’s revenue by about $10 billion in 2022. Research shows that a large proportion of Apple users (between 54 and 96 percent, by various estimates) refused to be tracked when given the choice. If Meta were forced to introduce a similar system, it would jeopardize one of the company’s main revenue streams.
Meta denies 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 through Meta’s platforms,” the company said in a statement.
