Monday, January 30

The EU announces restrictions that threaten the advertising business of Facebook and Instagram

Goal does not stop accumulating problems in the European Union (EU). The regulators European privacy regulators have ruled that the company that owns Facebook, instagram, WhatsApp and other applications cannot require its users to agree to accept the advertisements based on their activity within the platform, according to what the ‘Wall Street Journal’ has exclusively advanced, a decision that directly threatens their business.

When you accept the terms of service to use Facebook, Instagram or WhatsApp you are accepting that the company tracks everything you do within your platformwhich helps them get to know you better and sell advertisers the possibility of bombarding you with advertising personalized.

The ruling was approved on Monday by the European Data Protection Committee (EDPB), the body in charge of ensuring compliance with community data protection laws. Data Protectionconsidering that the regulations do not allow the advertising actions of Meta.

Blow to Meta’s business

Advertising is Meta’s main business model. In 2021, the giant of the social networks earned 114,934 million dollars thanks to the sale of ads, which represents 97.5% of its income. A significant part of these comes from companies based in the EU, so the authorities’ decision threatens to torpedo their business.

The European decision comes at a particularly difficult time for the company led by mark zuckerberg. For the first time since it went public in 2012, Meta has chained two consecutive quarters in which its revenues have decreased. Among other conjunctural factors, this is due to the investment with no return (yet) in the so-called metaverseto the fierce competition of TikTok and to the privacy policies of Manzana that cut Meta’s advertising revenue by up to $100,000 a year. On the other hand, the macroeconomic turmoil has led many companies to reduce their advertising investments, which has hurt the business of the old Facebook. That is why on November 9 it announced that it was laying off some 11,000 employees worldwide.

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For now, this setback has already been noticed in the bag. After the news broke, Meta has fallen by almost 6%, dragging down other social companies that depend on the same type of advertising business such as Snap either pinterest. So far this year, Meta’s stock market valuation has plummeted 66%.

According to sources familiar with the decision, the European regulator has ordered the Irish Data Protection Commission to issue a decision to that effect. The European division of Meta has its fiscal headquarters in Ireland, so it is the body of that country that must issue orders about the company. Last week, the Irish regulator already sanctioned Meta with a fine of 265 million euros for a security breach that exposed the data of up to 500,000 European users.

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