Meta Faces Regulatory Crackdown on Targeted Advertising in the EU

2 Billion Euro Fine

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Yujin Cho] Meta, the world's largest social media company, faces the risk of being ousted from the European market for its core revenue source, personalized advertising.

On the 6th (local time), the Wall Street Journal (WSJ), citing sources, reported that the European Union (EU) regulators made a decision the previous day to ban Meta from delivering personalized ads based on its existing terms that use personal information.

If this measure is implemented, Meta will no longer be able to generate revenue from personalized ads in Europe. Although the EU regulators' decision has not been officially announced, foreign media reported that the regulation is expected to be enforced within a month through the Data Protection Commission (DPC) in Ireland, where Meta's European headquarters is located.

Once the regulation is enforced, Meta is expected to face a blow to its advertising revenue along with a fine of at least 2 billion euros (approximately 2.8 trillion KRW). Politico described this as a significant blow to Meta, which has already started a high-intensity restructuring by laying off 11,000 employees due to deteriorating performance.

Meta has been struggling as it lost market dominance by having its user base taken away by emerging services like TikTok in its main social media businesses such as Facebook, Instagram, and WhatsApp, and its massive investments in the metaverse (extended virtual world) business have yet to materialize in results.

However, since Meta can appeal the decision of the EU authorities and the Irish DPC, personalized ads are not immediately banned in Europe. Meta stated, "Since this is not a final decision yet, it is difficult to predict future developments," and added, "We will communicate sufficiently during the process of the DPC creating related regulations."

Meta has faced controversies over privacy invasion and personal information leakage by collecting users' emails, web browsing histories, and using them for personalized advertising.

On the day the EU authorities' decision was announced, Meta's stock, listed on the New York Stock Exchange (NYSE), closed at $114.12, down sharply by 6.79%.