Meta in Crisis: 30 Billion Won Fine in Korea Followed by 15 Trillion Won Penalty in Europe

Mark Zuckerberg, CEO of Meta.
Photo by AFP Yonhap News

[Asia Economy Reporter Seungjin Lee] Meta (formerly Facebook), which was fined 30 billion KRW for violating the Personal Information Protection Act in South Korea, now faces an astronomical fine of up to 15 trillion KRW in Europe. Meta’s main revenue source, the advertising market, is also shrinking, making next year a critical period.

Fines Imposed Worldwide Total Tens of Trillions of KRW

According to industry sources on the 29th, the European Union (EU) Commission announced preliminary investigation results stating that Meta violated antitrust regulations in the online advertising market. This announcement comes one year and six months after the investigation began in June 2021. Based on the preliminary investigation, the Commission plans to launch a full investigation. The issue is the fine. If the full investigation reaches the same conclusion as the preliminary one, Meta will have to pay a fine of up to 10% of its revenue. Considering Meta’s annual revenue last year was $117.92 billion, the maximum fine is expected to reach $11.8 billion (approximately 14.97 trillion KRW).

Last September, Meta was also fined a record 30.8 billion KRW in South Korea for violating the Personal Information Protection Act. The Personal Information Protection Commission cited Meta’s collection of users’ third-party behavioral information without consent and its use for online personalized advertising as the reason. Investigations into Meta in South Korea are ongoing. Previously, Meta notified users that service usage would be restricted if they did not consent to personal data collection. The Commission is conducting a separate investigation on this matter as well. Additional fines are expected if further legal violations are found.

Meta’s ongoing lawsuit with Ethiopia, worth around 2 trillion KRW, has yet to be resolved. Ethiopia accuses Meta of inciting hatred and violence by leaving inflammatory posts unchecked and spreading them through algorithms, which allegedly fueled the Ethiopian civil war. There is also a lawsuit underway for unauthorized collection of financial data by a global tax firm. When combining already settled amounts and potential future fines, the total approaches 20 trillion KRW.

Stricter Personal Data Protection Regulations and Shrinking Advertising Market

The EU will fully enforce the Digital Markets Act (DMA) starting mid-2024. This law requires mega tech companies, known as 'Big Tech,' to open their platforms to competitors to ensure consumer choice. If a company violates this, it can be fined up to 10% of its global annual revenue.

Meta’s main revenue model, personalized advertising, is also in crisis. Apple updated its iOS operating system (version 14.5) in the first half of last year, introducing the App Tracking Transparency feature. This feature empowers users to freely allow or block personalized ads. Since Apple introduced this feature, Meta’s performance has halved. Meta reported $27.71 billion in revenue and $4.4 billion in net profit in Q3 this year, with net profit down 52% compared to the same period last year.

Samsung Electronics recently significantly enhanced privacy protection features on Galaxy devices, with the most notable being the 'Permission Settings' feature. This function blocks unwanted ads such as personalized ads and product recommendations by preventing access to user tracking data like website visit records and installed apps.