Facebook's core business relies on user data collection and advertising
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Meta, the parent company of Facebook and Instagram, has been told by a European Union privacy regulator that it cannot require users to opt into personalized ads, fines them $411 million.
Companies like Facebook and Instagram expanded into the monoliths they are due to their extensive user data collection and subsequent advertising. However, a new European Union ruling may put an end to that revenue source.
According to The Wall Street Journal, the Ireland Data Protection Commission ruled that Meta was violating European Union privacy law by requiring users opt into personalized ads to use its services. The ruling is coupled with a $411 million fine.
When a user signs up for an Instagram or Facebook account, they are asked to agree to the platform's Terms of Service filled with legal jargon. Most people just click agree and move on, but within those many pages is an agreement to provide data for personalized advertising.
The EU privacy regulator says that Meta cannot use its contracts with Facebook and Instagram users to justify showing personalized ads. That, in turn, would mean Meta would have to give users the ability to opt-out of personalized ads in order to operate in the EU.
Meta has disagreed with the ruling and plans to appeal it. The company's core business relies on its ability to collect immense amounts of user data and show hyper-targeted ads.
The company is facing a similar lawsuit in the United States, claiming that it circumvents user's choice for opting out of ad tracking using Apple's App Tracking Transparency feature.
