Shares of Meta Platforms Inc. plunged more than 6% Tuesday after European Union regulators dealt its digital-ad business a potentially devastating blow. Privacy officials ruled Facebook’s parent company
should not require users to agree to personalized ads based on their online activity, according to a report in the Wall Street Journal, citing people familiar with the decision.
EU privacy law prohibits Meta platforms, such as Facebook and Instagram, from using their terms of service as a justification for allowing such advertising, regulators concluded in a series of decisions, the Journal reported. The new EU decisions can be appealed. The EU rulings, if upheld, would “have a dramatic impact on Meta’s revenue in Europe, kneecapping its ability to use information about its users’ on-platform activities in order to sell targeted advertising,” Insider Intelligence analyst Debra Aho Williamson said. “Europe had already been the region with Meta’s largest losses in users and revenue.” Meta is already reeling from privacy changes imposed by Apple Inc.
that limit the information Meta can glean from its users’ off-platform activities, costing Meta at least $10 billion in potential sales, former Chief Financial Officer David Wehner said. Compounding matters, a weaker euro has added to strong headwinds in the region for Meta. “We expect Meta to fight vigorously to defend its business, and it could be months, if not years, before any impact is truly felt,” Aho Williamson said. Meta said the decision is not final and it is too early to speculate on its impact. “[The EU law General Data Protection Regulation] allows for a range of legal bases under which data can be processed, beyond consent or performance of a contract,” a Meta spokesperson said in an email to MarketWatch. “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 [Data Protection Commission regulators] on their inquiries and will continue to engage with …