An EU Court of Justice has ruled that Meta must get user consent before sending personalized ads in certain circumstances.
Following a recent ruling that fined it $425 million and is under appeal, Meta started using a EU law provision that cites “legitimate interest” of its business.
Today’s rulling states that users interest overrides that “legitimate interest”.
As such, the ruling will compel the likes of Facebook to ask users to opt in to ads that are of interest to them rather than the company displaying any ads and asking users to click “yes”.
Today’s rulling is not appealable.
Meta spokesperson said that the company is evaluating the court’s ruling and that it will comment further in due course.
The EU and US have signed a new transatlantic deal that will allow transfer of user data to U.S, without causing any safety concerns.
The transatlantic deal created concerns for tech giants such as Meta.
During the latest earnings, Meta warned that if an agreement on the transatlantic EU-US data transfer doen’t materialize, it will be forced to stop offering its services in Europe.
Roughly 10% of its worldwide ad revenue comes from ads delivered to Facebook users in EU countries.
Norway’s data protection authority, Datatilsynet, said it will fine Meta $100,000 per day over data breaches unless it takes action aimed at resolving it.
The fine will run from Aug. 4 to Nov. 3.
Meta said it will review the decision while adding that no immediate impact on its services is expected.
Norway is not a member of the EU but is part of the European single market.
Meta has said that it will seek user consent before allowing businesses to send targeted ads to them.
“Today, we are announcing our intention to change the legal basis that we use to process certain data for behavioural advertising for people in the EU, EEA (European Economic Area) and Switzerland from ‘Legitimate Interests’ to ‘Consent’,” Meta said in a blog post.
It added that the change will not cause any immediate impact to its services in the region.
“There is no immediate impact to our services in the region. Once this change is in place, advertisers will still be able to run personalised advertising campaigns to reach potential customers and grow their businesses. We have factored this change into our business outlook,” it said.
Meta is considering a paid version of Facebook and Instagram with no ads on top of the free version in Europe in order to combat privacy regulations, that’s according to the New York Times.
The New York Times did not indicate how much the new version will cost.
Meta has not responded to a request for a comment.
Meta Platforms among those designated as “gatekeepers” of online services by EU commission.
Under the European Union’s Digital Markets Act (DMA), companies with more than 75 billion euros in market capitalization and 45 million monthly active users are considered as “gatekeepers”.
Companies labelled as such will be required to make their messaging apps interoperate with that of rivals and allow users to decide which apps to pre-install on their devices.
A fine of up to 10% of annual global turnover will be imposed on any company that violates the DMA act.
The “gatekeepers” will have six months to comply with the DMA obligations.
Meta losses a Norwegian appeal case that sought to stop a fine of $93,200 per day starting from August 4 to November 3 for collecting user data and using it in its targetted advertising.
The rulling could have wider implications in europe as Datatilsynet, Norwey’s data regulator, plans to refer it to the EU data regulator.
“We are disappointed by today’s decision and will now consider our next steps,” a Meta spokesperson told Reuters.
Under advertising, Meta will be required to seek user consent before using their data for advertising purposes. Business customers will be empowered to ask for data used in their compaigns. I think this will impact Advantage+ Campaigns, where customers complained that they couldn’t access such data.
Under messaging, users would be able to message others via other apps such as Signal and Telegram directly when in Facebook Messenger and WhatsApp.
Under marketplace, Meta will be banned from giving its products and services preferential rankings over alternatives.
Meta starts implementing the Digital Markets Act (DMA) in WhatsApp.
WABetaInfo reports that a new android version of WhatsApp has a new screen called “third-party chats”, which enables users to receive messages from people using other messaging tools.
Meta Platforms wants to charge European users $10.50 a month to use Instagram or Facebook free of ads on desktop, roughly $17 to use both accounts, and roughly €13 to use either account on mobile devices, that’s according to the Wall Street Journal.
Meta wants to roll out the plan in the coming months.
The New York Times reported last month that Meta was considering coming up with the plan, but had not given the pricing as well as the timeline.
Meta spokesperson said Meta believes in “free services which are supported by personalized ads” but looking for “options to ensure we comply with evolving regulatory requirements.”
Ireland’s Data Protection Commission as well as the European Commission has not responded to the claims.
Europe accounted for 22% of Meta’s revenue in 2022.
Meta introduces an ad-free subscription plan for Facebook and Instagram users in the EU, European Economic Area and Switzerland in order to comply with EU regulations on personalized ads.
"In its ruling, the CJEU expressly recognised that a subscription model, like the one we are announcing, is a valid form of consent for an ads funded service, " Meta said.
The subscription will cost 9.99 euros per month for web users and 12.99 euros per month for iOS and Android users and will apply to all linked Facebook and Instagram accounts in a user’s Accounts Center until March 1, 2024.
From March 1, 2024, web will attract an additional fee of 6 euros per month while iOS and Android will charge an additional 8 euros each month for each additional account listed in a user’s Account Center.
Meta said this subscription model was factored into its most recent business outlook and guidance.
The Wall Street Journal reported about this subcription early this month though the pricing was a bit different from the one announced today.
It seems the decision to offer the subscription plan has not been greenlighted by the data protection authorities yet.
“Acting in consultation with its fellow European supervisory authorities, the DPC has been engaged in a detailed regulatory assessment of the consent-based model since it was first proposed by Meta in July. That exercise is being led by the DPC, reflecting its position as Lead Supervisory Authority for Facebook and Instagram in Europe. The exercise has not yet concluded, and no findings have been made to date. It is due to be completed shortly, at which point the DPC will notify Meta if it considers that the manner in which its new user offerings are to be implemented is compatible with Meta’s obligations under GDPR,” Ireland’s Data Protection Commission (DPC) told Techcrunch.
The European data protection regulators have approved a Europe-wide ban on the use of personal data of Facebook and Instagram users for targetted advertising.
Greet Gysen, spokeswoman for the European Data Protection Board told Bloomberg that the Ireland’s Data Protection Commission now has two weeks to “impose a ban on the processing of personal data for behavioral advertising on the legal bases of contract and legitimate interest.”
Meta said in a statement that the EDPB has been aware of its subscription model for weeks and that they have been engaged with them to arrive at mutually beneficial agreement but the ban “unjustifiably ignores that careful and robust regulatory process.”
Ireland’s Data Protection Commission said its main focus now is to conclude “its detailed assessment of the consent-model.”
The ban extends that imposed by Norway on Meta Pltaforms in November.
Assesment;
EDPB’s decisions are binding but can be appealed. Given that EDPB was already aware of Meta’s subscription plan that would possibly address the consent issue, I believe that this decision may contain a statement that would give Ireland’s Data Protection Commission(DPC) the authority to remove the ban. Also, if the subcription plan meets the authority’s objectives, Meta may use it to appeal the decision. Until we have the full report from EDPB or DPC, it’s hard to give a concrete assessment of the situation. I will work on assessing the matter and update this post with my new assessment and additional context.
The binding decision is based on legal bases contract and legitimate interest, which Meta plans to no longer rely on. That means the risk lies on the subscription model. If the DPC accepts the subscription model within two weeks, it will be positive for Meta. Otherwise, Meta’s use of personal data for behavioural advertising will come to a standstill, or else, it risks a fine of 4% on its global turnover. Like in the past decisions, Meta could appeal the ban though, giving them time to lobby for the subscription model.
“The EDPB takes note of Meta’s proposal to rely on a consent based approach as legal basis, as it was reported on 30/10. The Irish DPC is currently evaluating this together with the Concerned Supervisory Authorities (CSAs),” the statement reads.
“The EDPB decision relates to legal bases [that] Meta no longer intends to rely on, following findings of the DPC that reliance on these bases did not demonstrate compliance with GDPR,” Graham Doyle, Deputy Commissioner at the Irish DPC, said.
“Since we now will get a permanent ban, non-compliance with the EU/EEA-wide ban would in itself be a violation of the GDPR, which could be sanctioned with up to 4% of global turnover,” Tobias Judin, the head of Datatilsynet’s international section, told Reuters.
“By offering an advertising-free subscription service, Meta can satisfy the European Union’s GDPR “consent basis” for collecting data in a likely revenue-neutral manner given the company plans to continue offering its core ad-supported service to most E.U. users,” Citi analyst Ronald Josey said yesterday.
Advocacy group None Of Your Business (NOYB) has filed a complaint with the Austrian regulator against Meta’s ads-free subscription model arguing that it amounts to paying a fee to ensure privacy.
“EU law requires that consent is the genuine free will of the user. Contrary to this law, Meta charges a ‘privacy fee’ of up to 250 euros per year if anyone dares to exercise their fundamental right to data protection,” NOYB data protection lawyer Felix Mikolasch said in a statement.
“Not only is the cost unacceptable, but industry numbers suggest that only 3 percent of people want to be tracked – while more than 99 percent don’t exercise their choice when faced with a ‘privacy fee,’” the group said. “If Meta gets away with this, competitors will soon follow in its footsteps.”
The complain is expected to be forwarded to the Irish Data Protection Commission which oversees Meta.
A U.S. federal judge ruled against Meta Platforms in a privacy dispute with the FTC.
Meta Platforms wanted the District Court to take over its dispute with the FTC.
In May, the FTC accused Meta of misleading parents on how much control they have over their kids’ usage of the Messenger Kids app and proposed to tighten the $5 billion settlement it reached with the company in 2019 to prevent Meta from making money off data it collects from the underage users, including from the virtual reality business.
The ruling grants the FTC the right to implement the proposed changes.
“We are considering our legal options in light of the Court’s ruling and will continue to vigorously fight the FTC’s unlawful attempt unilaterally to rewrite our agreement,” Meta Platforms spokesman said.
A coalition of almost 20 consumer protection organizations in Europe has also criticized Meta’s ad-free subscription model terming it as “unfair” and “illegal”.
The coalition said they will file a complaint with the network of consumer protection authorities (CPC) today.
Meta’s Italian tax case has been referred to the EU Commission’s VAT committee for evaluation, Reuters reported citing three sources familiar with the matter.
Meta faces a potential tax bill of around $954 million in Italy.
The case relates to imposing VAT on online services provided by Meta.
Though the commission’s assessment is non-binding, if it decides that the tax is applicable in Italy, other EU countries can impose it since taxes are harmonised at the European level.
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Turkey’s competition authority said it will fine Meta Platforms $160,000 per day for failing to provide enough documentation in relation to its 2022 online video advertising market investigation.