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Facebook and Instagram users in the EU can now choose to see less personalized ads when using the apps. Meta has launched a new app option to appease regulators investigating breaches of the law Digital Markets Act And GDPR.
This free option ensures that users see ads that are less relevant to their interests. The ads they see are based on their browsing activity during that session and a few other data points, including their age, location, and gender.
Personalized advertising increases revenue for companies, Meta said in a press release. Reference was made to one internal study which shows that Apple App tracking transparency This requirement requires iOS apps to ask users for permission to share their data-driven businesses to increase prices by at least 3.4% as their ads become less effective.
To counter the negative impact of the less personalized option on Meta’s advertisers, users who choose it will also see unskippable ads for a few seconds. This allows advertisers to ‘connect with a wider audience’.
In addition to the new advertising option, Meta is reducing the price of its ad-free subscription by 40%, from €9.99 to €5.99 per month on web and from €12.99 to €7.99 per month on iOS and Android. Each additional account costs an additional €4 per month on web and €5 per month on mobile.
TO SEE: UK Competition Watchdog accepts Meta’s proposed changes to the use of advertising data
Meta says advertising-related requirements go too far
In the announcement, the tech giant said the EU’s advertising-related requirements “go beyond what is required by law,” but that the EU is giving in anyway.
Meta added that European companies generate €107 billion in revenue every year from personalized ads on their platforms. Yet this is expected to be eroded as digital advertising is forced to become less efficient. Meta also referred to September report by former President of the European Central Bank, Mario Draghi, that called for an overhaul to make the region more economically competitive.
“We remain committed to personalized advertising, which will always be the cornerstone of a free and inclusive internet,” Meta said in the announcement.
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The EU’s continued pursuit of Meta’s advertising practices
In recent years, the EU has worked hard to protect citizens’ digital autonomy and hold big tech companies accountable for their data collection and privacy practices. Meta has spent a lot of time in this crosshairs, as Facebook and Instagram rely heavily on collecting user data to conduct behavioral analytics and granularly target ad campaigns.
A large portion of these platforms’ revenue comes directly from the clicks and engagement-oriented ads they generate. So the loss of a segment of user data as large as the population of the 27-nation EU bloc could spell major trouble for their continued growth. Meta therefore has a financial interest in meeting the EU’s requirements. In the third quarter of this year 23.5% of advertising revenue was generated by European users.
At the beginning of 2023, the EU will Data Protection Commission required Meta to ask users for consent before showing personalized ads. It relented in November by introducing a subscription option that completely removes targeted ads from Facebook and Instagram for European users, starting at €13 per month on mobile. The fee was intended to recoup the financial losses that would occur if many European users did not consent to targeted advertising.
However, on July 1 this year, the European Commission ruled that this amounted to a ‘pay or consent’ advertising model And violated the DMA on a provisional basis. The authority claimed that Meta essentially “forces” users to consent to their data being used for advertising and does not offer a less personal, free equivalent service to those who do not consent.
TO SEE: Apple’s geo-blocking practices may violate EU rules
The EU could impose heavy fines on Meta
If the preliminary findings are confirmed, Meta could face fines of up to 10% of total global revenue – or 20% for repeat violations – which is likely a strong motivator behind the introduction of its new advertising option this week. The Commission has until March 25, 2025 to make a ruling, but it is still unclear whether the less personalized advertising option will allow them to escape a fine.
Facebook and Instagram usage data from previous browsing sessions to choose which ads you want to show. So even if users who choose the less personalized level only see ads based on their current session, that session could still be influenced by data collected in the past. This practice may not be well received by regulators.
Over the years, the DPC has done just that has fined Meta several times for violation GDPR rules based on its targeted advertising practices. In addition to the DMA and GDPR, Meta must comply with the Digital Services Acta set of rules designed to govern how ‘Very large online platforms” handle privacy, protect their users and operate transparently.
But it’s not just advertising data that Meta and the EU are at war over. In June, Meta slowed down the training of its large language models on public content shared on Facebook and Instagram in Europe after regulators suggested it might require permission from the content owners. Meta AI, the groundbreaking AI assistant, has still not been released within the block due to its problems “unpredictable” regulations.
TO SEE: EU’s AI law: Europe’s new rules for artificial intelligence
Meta representatives, along with Spotify, SAP, Ericsson, Klarna and more, signed an open letter to Europe in September express concerns about ‘inconsistent regulatory decision-making’. It says interventions by European data protection authorities have created uncertainty about what data they can use to train their AI models.