Facebook and Instagram users in the E.U. can now opt to see less personalised adverts when using the apps. Meta has launched a new app option to appease regulators investigating breaches of the Digital Markets Act and GDPR.
This free option will result in users seeing ads that are less relevant to their interests. The ads they see will be based on their browsing activity in that session and a few other data points, including their age, location, and gender.
Personalised advertising boosts revenue for companies, Meta said in a press release. It referenced an in-house study showing that Apple’s App Tracking Transparency requirement mandates that iOS apps must ask users for permission to share their data-led companies to increase prices by at least 3.4% as their ads became less effective.
To counteract the negative impact of the less personalised option on Meta’s advertisers, users that opt for it will also see ads that are unskippable for a few seconds. This will “allow advertisers to connect with a wider audience.”
In addition to the new advertising option, Meta is reducing the price of its no-ads subscription tier by 40%, from €9.99 to €5.99 per month on the web and from €12.99 to €7.99 per month on iOS and Android. Each additional account will cost another €4 per month on the web and €5 per month on mobile.
SEE: UK Competition Watchdog Accepts Meta’s Proposed Changes to Ad Data Use
Meta says ad-related demands go too far
In the announcement, the tech giant said that the E.U.’s ad-related demands go “beyond what is required in the law,” but it is relenting regardless.
Meta added that European businesses earn €107 billion in revenue from personalised ads on their platforms each year. Still, it is expected that this will be eroded if forced to make digital advertising less efficient. Meta also referenced a September report by former European Central Bank President Mario Draghi that called for an overhaul to make the region more competitive economically.
“We remain committed to personalized advertising, which will always be the cornerstone of a free and inclusive internet,” Meta said in the announcement.
The EU’s ongoing pursuit of Meta’s advertising practices
In recent years, the E.U. has worked hard to protect citizens’ digital autonomy and hold large tech companies accountable for their data collection and privacy practices. Meta has spent much time in its crosshairs, as Facebook and Instagram rely heavily on user data collection to conduct behavioural analytics and granularly target advertising campaigns.
Much of these platforms’ revenue comes directly from the clicks and engagement targeted ads generate. Thus, losing a segment of user data as big as the E.U.’s 27-nation bloc’s population could mean major trouble for their continued growth, so Meta has a financial interest in conceding with the E.U.’s demands. In the third quarter of this year, 23.5% of its advertising revenue was generated by European users.
At the start of 2023, the E.U.’s Data Protection Commission demanded Meta ask users for consent before showing them personalised ads. It conceded the following November by introducing a subscription option that removes targeted ads entirely from Facebook and Instagram for European users, starting at €13 a month on mobile. The fee was intended to recoup the financial losses it would feel if many European users did not consent to targeted ads.
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 preliminary basis. The authority claimed that Meta essentially “forces” users to consent to their data being used for advertising and does not provide a less personalised, free equivalent service for those who don’t consent.
SEE: Apple’s Geo-Blocking Practices Could Violate EU Rules
EU could impose heavy fines on Meta
If the preliminary findings are confirmed, Meta could face fines of up to 10% of its total worldwide turnover — or 20% for repeated offences — likely a strong motivator behind introducing its new advertising option this week. The Commission has until March 25, 2025, to deliver a verdict, but it is still unclear whether the less personalised advertising option will see them escape a fine.
Facebook and Instagram use data from prior browsing sessions to choose what ads to display. So, even if users that opt for the less-personalised tier only see ads based on their current session, that session could still be influenced by data gathered in the past. This practice may not sit well with regulators.
Over the years, the DPC has fined Meta several times for violating GDPR rules based on its targeted advertising practices. In addition to the DMA and GDPR, Meta must comply with the Digital Services Act, a set of rules designed to regulate how designated “Very Large Online Platforms” handle privacy, protect their users, and operate transparently.
But it’s not just advertising data that Meta and the E.U. are warring over. In June, Meta delayed the training of its large language models on public content shared on Facebook and Instagram in Europe after regulators suggested it might need to get the consent of the content’s owners. Meta AI, its frontier AI assistant, has still not been released within the bloc due to its “unpredictable” regulations.
SEE: EU’s AI Act: Europe’s New Rules for Artificial Intelligence
Representatives from Meta, along with Spotify, SAP, Ericsson, Klarna, and more, signed an open letter in September to Europe expressing their concerns about “inconsistent regulatory decision-making.” It says that interventions from the European Data Protection Authorities have created uncertainty about what data they can use to train their AI models.