Meta suffered a major defeat on Wednesday that could severely undercut its Facebook and Instagram advertising business after European Union regulators found it had illegally forced users to effectively accept personalized ads.
The decision, including a fine of 390 million euros ($414 million), has the potential to require Meta to make costly changes to its advertising-based business in the European Union, one of its largest markets.
The ruling is one of the most consequential judgments since the 27-nation bloc, home to roughly 450 million people, enacted a landmark data-privacy law aimed at restricting the ability of Facebook and other companies from collecting information about users without their prior consent. The law took effect in 2018.
The case hinges on how Meta receives legal permission from users to collect their data for personalized advertising. The company includes language in its terms of service agreement, the very lengthy statement that users must accept before accessing services like Facebook, Instagram and WhatsApp, that effectively means users must allow their data to be used for personalized ads or stop using Meta’s social media services altogether.
The decision does not specify how the company must comply with the ruling, but it could result in Meta allowing users to choose whether they want their data used for such targeted promotions.