European regulators said that Facebook’s parent company Meta is running afoul of the law in the way it seeks legal permission from users to track their data, a decision that could have a detrimental impact on the company’s advertising revenue.
The Data Protection Commission, the Irish entity that protects privacy rights under European Union law, announced on Wednesday that it was fining Meta 210 million euros ($222 million) for its data collection practices on Facebook and 190 million euros ($201 million) for similar practices at Instagram. The ruling could significantly hamper Meta’s operations in Europe since the two social platforms might be unable to use terms of service agreed to customers to justify sending them personalized ads.
“In breach of its obligations in relation to transparency, information in relation to the legal basis relied on by was not clearly outlined to users, with the result that users had insufficient clarity as to what processing operations were being carried out on their personal data,” the regulatory agency concluded.
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The complaint behind the fines arose after the EU passed its General Data Protection Regulation, a law that enabled additional privacy and security protections for European residents, in 2018. While Meta had adapted its terms of service to match Europe’s new security laws, the DPC found that Meta failed to be transparent about how it used data collected from what users did within Facebook and Instagram. The company also failed to offer options to opt-out of the data collection, the DPC alleged, which is also a breach of the GDPR.
Meta responded to the announcement by stating that it “strongly disagrees” with the conclusion and intends to “appeal the substance of the decision” due to a lack of “regulatory clarity.” It said that the decision won’t prevent personalized advertising on Facebook and that it is looking into additional tools to allow users to personalize their experience despite the pressure from lawmakers.
The appeal will take several years. However, if the DPC’s decision is upheld, then Meta will be forced to allow users to opt out of their data within the app being tracked, a decision that could severely undercut its advertising revenues.
Meta took a similar hit in May 2021 when Apple required iPhone app developers to ask users if they want their data to be tracked. The simple requirement led to Facebook losing $10 billion dollars in revenue that year.
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Meta has been the target of the DPC for regulations for more than a year. The Big Tech giant has been fined by the DPC for more than $1 billion since the fall of 2021. This includes fines addressing Instagram’s handling of children’s data as well as its inability to stop hackers from stealing user data.
