EU Says Meta Needs to Change Targeted Ad Practices

European privacy regulators say Meta shouldn’t require users to accept ads based on online activity.

The ruling could limit the data the social media giant can use to sell advertising, the Wall Street Journal reported Tuesday (Dec. 6), citing information from people familiar with the regulators’ ruling.

That ruling — which came down Monday from a board representing all privacy regulators in the EU — says that the bloc’s privacy law doesn’t allow Meta to use its terms of service to justify allowing such advertising.

The report notes that if a large portion of users opt-out of targeted ads, Meta’s platforms Facebook and Instagram would have less information to build audiences for the personalized ads that are crucial to its revenue.

The sources told the Journal the ruling doesn’t exactly order Meta to change its practices. Instead, it calls on Ireland’s Data Protection Commission — Meta’s main privacy regulator — to issue public orders to go with this decision, as well as steep fines.

Meta gave PYMNTS the following statement: “This is not the final decision and it is too early to speculate. GDPR allows for a range of legal bases under which data can be processed, beyond consent or performance of a contract. Under the GDPR there is no hierarchy between these legal bases, and none should be considered better than any other. We’ve engaged fully with the DPC on their inquiries and will continue to engage with them as they finalise their decision.”

The news comes one month after the U.K.’s Competition and Markets Authority (CMA) published new guidelines for platforms, brands, and influencers to help users spot a paid-for endorsement online.

According to the guidelines, any incentivized ads must be clearly labeled as such in a way that immediately makes them stand out from other content.

The instructions also include ways that platforms can further encourage improved labeling, such as by providing a one-click tool highlighting that a post is an advertisement and promoting the use of algorithms that automatically flag potential paid endorsements.

In 2020, Instagram agreed to a series of changes that allow for clear labeling of incentivized posts after a CMA investigation.