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Surveillance capitalism just got a kicking. In an ultimatum, the European Union has demanded that Meta reform its approach to personalized advertising—a seemingly unremarkable regulatory ruling that could have profound consequences for a company that has grown impressively rich by, as Mark Zuckerberg once put it, running ads.
The ruling, which comes with a €390 million ($414 million) fine attached, is targeted 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 privacy law that was introduced in 2018, actually has teeth. More than 1,400 fines have been introduced since it took effect, but this time the bloc’s regulators have shown they are willing to take on the very business model that makes surveillance capitalism, a term coined by American scholar Shoshana Zuboff, tick. “It is the beginning of the end of the data free-for-all,” says Johnny Ryan, a privacy activist and senior fellow at the Irish Council for Civil Liberties.
To appreciate why, you need to understand how Meta makes its billions. Right now, Meta users opt in to personalized advertising by agreeing to the company’s terms of service—a lengthy contract users must accept to use its products. In a ruling yesterday, Ireland’s data watchdog, which oversees Meta because the company’s EU headquarters are based in Dublin, said bundling personalized ads with terms of service in this way was a violation of GDPR. The ruling is a response to two complaints, both made on the day GDPR came into force in 2018.
Meta says it intends to appeal, but the ruling shows change is inevitable, say privacy activists. “It really asks the whole advertising industry, how do they move forward? And how do they move forward in a way that stops these litigations that require them to change constantly?” says Estelle Masse, global data protection lead at digital rights group Access Now.
EU regulators did not tell Meta how to reform its operations, but many believe the company has only one option—to introduce an Apple-style system that asks users explicitly if they want to be tracked.
Apple’s 2021 privacy change was a huge blow for companies that rely on user data for advertising revenue—Meta especially. In February 2022, Meta told investors Apple’s move would decrease the company’s 2022 sales by around $10 billion. Research shows that when given the choice, a large chunk of Apple users (between 54 and 96 percent, according to different estimates) declined to be tracked. If Meta was forced to introduce a similar system, it would threaten one of the company’s main revenue streams.
Meta denies it has to alter 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.