Facebook and Instagram face a decision that could end targeted advertising

Meta logo on phone in front of stock charts

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Privacy regulators in the European Union have decided Meta, the parent company of Facebook and Instagram, cannot give gifts Collecting information for targeted advertising is a condition of joining social networksaccording to reports published on Tuesday into The Wall Street Journal and Reuters. The decision threatens to upend the social media giant’s business model and change the financial underpinnings of the internet.

Registering on Facebook or Instagram means going through the privacy policy and agreeing to the social networks. digital control for advertising purposes. If you do not agree, you may not have an account. But Europe’s board of privacy regulators issued a series of new rulings on Monday declaring that such an obligation exists. violates consent General Data Protection Regulation (GDPR)Broad EU privacy law.

Although the decision was not made public, key details were leaked to the media on Tuesday. This decision will not only affect the Meta. Every company that serves targeted ads works the same way as the social media giant. Sometimes you can choose Using data from other parts of the Internet for advertising on social mediahowever, the new ruling seeks to limit companies’ use of the data they collect own networks. This would be a sea change in how online privacy works.

“The decision by EU regulators, if upheld, would dramatically impact Meta’s revenues in Europe and undermine its ability to use information about its users’ in-platform activities to sell targeted advertising,” said Debra Aho Williamson. Senior analyst at Insider Intelligence, in an email. “However, we expect Meta to fight hard to protect its business, and it could be months, if not years, before any impact is truly felt.”

Meta did not immediately respond to a request for comment on the decision.

The decision does not force Meta to immediately change its practices. Instead, it applies to the Irish Data Protection Commission to issue specific orders within a monthcan include hefty fines, This was reported by Reuters. Meta will likely appeal the decision as well, which could allow the status quo to continue litigation.

But depending on how the ruling goes, that could mean Meta and other companies it owns need to buy real, informed consent before we chew up all your personal data and serve you ads. What did it look like? It’s not clear yet.

To people a selection will be followed online (and still use given site or app), they tend to say no. Over the past year, Apple has introduced a privacy setting that allows apps to ask permission before tracking users, “Ask App Not to Track..” The vast majority of people say no, and Meta’s work he sniffed as a result — the company said it lost $10 billion due to Apple’s privacy setting alone. An EU A ruling against Meta could create a financial crisis for the company with its share price already fell as a the rock this year. Shares of Meta fell 6.79% at the closing bell on Tuesday following the news.

But the verdict is probably bigger than Meta. Many other companies than Google To TikTok For smaller players, it operates through a similar legal model: consent to targeted additions or use another platform. It is unclear how widely the EU decision will apply it is possible that it is one of the foundations of the continent online business models could be broken.

It’s an open secret in the tech industry that many companies, apps, and websites haven’t found a way to make money other than collecting data and targeting ads. If a company can’t access your data, they can still show you “contextual” ads based on the content you’re viewing (imagine a Honda ad in an article about cars). But contextual advertising is cheaper than customized ads through your personal dataand therefore it is less profitable for the company to sell it.

Moment The EU ruling only directly affects businesses operating in the EU, but it’s a sign that governments may finally be changing their tune when it comes to privacy. Until now, lawmakers have been willing to pass privacy rules that make certain data practices more difficult for business, but this is the first time a major government agency has took steps to limit directly targeted ads.

But GDPR serves as a model for privacy laws in the US and around the world. If this strict interpretation of the law succeeds—however you define success—it could point to a more private future.

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