Stock market: Europe sounds the death knell for Facebook's advertising model

The European Data Protection Committee (EDPS) has issued a resounding opinion, judging the paid subscription of Facebook and Instagram incompatible with the GDPR. Meta, parent company of the two social networks, is forced to rethink its business model in the European Union.

A blow to Facebook’s “Pay or Consent” model

Since the end of 2023, Facebook and Instagram have offered their European users a difficult choice: pay a monthly subscription of €9.99 or accept the use of their personal data for advertising targeting purposes. An alternative called “Pay or Consent”, supposed to meet the requirements of the GDPR after several convictions.

Unfortunately for Meta, the EDPS has just judged this system to be non-compliant with the fundamental right to data protection. According to the regulator, only offering the choice between payment and advertising profiling does not allow free and informed consent from users. A scathing disavowal that plunges Facebook and Instagram into uncertainty.

This notice also constitutes a warning for all web giants whose model is based on the monetization of personal data. Thus, Google, Amazon and even Microsoft will have to adapt in turn, under penalty of heavy sanctions.

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Towards a more ethical web?

The decision of EDPS constrains Facebook to completely review its way of operating in Europe. Indeed, the social network will have to offer a service which is financed neither by a paid subscription, nor by the massive exploitation of personal data for advertising targeting purposes.

The only avenue mentioned by the regulator would be to turn to much more generic advertisements, using little or no personal data. A 180-degree turnaround for Facebook, which has built all of its growth and profits on ultra-personalization.

More broadly, this opinion could accelerate the rise of decentralized social networks, operating on models that are much more respectful of privacy. Orb, Nostter and are promising examples. Faced with tougher regulations, more and more users could turn to these alternatives.

In short, by putting a stop to the “Pay or Consent” system of the web giants, the EU is imposing a profound rethinking of the digital economy. If Meta is on the front line, the entire online advertising ecosystem will have to reinvent itself to reconcile profitability and respect for privacy. A major challenge that could accelerate the emergence of new models.

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