Millionaire fines test the Meta model in Europe

The economic model of the American giant Meta Platformsowner of Facebookis facing a tough test in the European Unionafter being hit with a new multi-million dollar fine from the Irish regulator.

Meta is in the European viewer for its controversial handling of its users’ personal data, and the way in which that is used for personalized advertising.

The Irish personal data regulator fined Meta twice on Wednesday, amounting to 390 million euros (about $410 million at current exchange rates).

The Irish Data Protection Commission (DPC) claimed that Meta breached “its transparency obligations” and used an erroneous legal basis “for its processing of personal data for the purposes of personalized advertising.”

This decision “could represent a hard blow for Meta,” anticipates Dan Ives, an analyst at the US investment firm Wedbush Securities, who estimates that the group could lose between 5% and 7% of its business volume in the medium term.

Meta announced that it will appeal the sanctions, which leaves a margin “to delay the deadlines” while it evaluates the course to take, adds this expert.

Europe represents a key market for Meta.

Facebook had 303 million daily active users in Europe in the third quarter of 2022, compared with 197 million in the US/Canada area, out of a total of 2 billion worldwide.

The European market represented around 21% of Meta’s advertising turnover in the same period (47% for the United States/Canada area), according to its figures.

According to the lawyers, the Irish regulator’s decision theoretically obliges the American giant to ask its European users for their specific authorization to offer them personalized advertising.

Personalized advertising, theoretically selected based on the user’s tastes, has been a key element of the big players on the Internet and social networks for years.

Non-selective advertising means less money for companies.

“There is no other possible solution than to ask for the formal consent” of Internet users, explains Paul-Olivier Gibert, president of the French Association of Personal Data Controllers.

The lawyer Sonia Cissé, from the Linklater cabinet, believes for her part that the Irish decision “does not question the economic models” based on personalized advertising, as is the case of Meta.

“But it regulates and limits them, clearly,” he insists.

To entice users to give consent to consent, “companies will need to get their wits up,” she predicts.

irish benevolence

Meta can at least count on some Irish benevolence. The agency acknowledged that it only sanctioned the group after receiving pressure from its European counterparts, meeting in the European Committee for Data Protection.

The DPC at the same time refused to open an investigation into the data set collected by Facebook and Meta, as claimed by their European counterparts.

“Right now there are many sanctions against American companies,” highlights a lawyer specializing in lawsuits related to personal data, under anonymity.

“European regulatory authorities are very vigilant about protecting the interest of users” of the platforms but “sometimes I wonder if it is not a way of privileging European companies,” he adds.

“Users like to be offered free services that, for the moment, European companies have not been able to provide,” he points out.