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EU Court Challenges Meta's Ad Strategy, Raising Questions About its Future

The Court of Justice of the European Union (CJEU) may undermine Meta's last legal justification for targeted advertising in the EU. This comes as a significant blow for Meta and potentially other tech giants in the region.

European Union flag and Meta logo, symbolizing the CJEU's challenge to Meta's targeted advertising model.

The European Union's top court, the Court of Justice of the EU (CJEU), has ruled against Meta, potentially impacting the Facebook owner's core business model of targeted advertising. This ruling might lead to a ban in Germany on Meta's usual practice of combining user data from WhatsApp, Instagram, and third-party websites with Facebook data for personalized advertising.

This decision could potentially undermine Meta's remaining legal justification for providing targeted advertising in the EU, putting its future in the region in question. Given that many tech giants rely on similar justifications, the ruling could have far-reaching repercussions across the sector.

The CJEU decision confirms that competition authorities, such as Germany's Federal Cartel Office (Bundeskartellamt), can evaluate a company's compliance with laws such as the General Data Protection Regulation (GDPR) when assessing whether the company is breaching antitrust laws. This ruling could shape the future of antitrust and privacy enforcement in the EU, seeing Big Tech's data collections as a potential competition issue.

The most substantial aspect of the ruling is its assertion that, without genuine user consent, Meta cannot claim a "legitimate interest" in processing people's data for personalized advertising. Under GDPR, companies must have some legal basis for processing Europeans' personal data, and the court has now rejected Meta's claim, stating it needs real user consent for such profiling.

Privacy activists, like Max Schrems, have celebrated the ruling, saying it clarifies that various legal theories by the industry to bypass the GDPR are null and void. The ruling could significantly impact Meta and other online advertisement companies.

While there's still uncertainty over a new EU-U.S. data-sharing agreement that could allow Meta to continue exporting personal data to the U.S., it's not clear if this will be sufficient, considering concerns about adequate protection of Europeans' data in the U.S. It's expected that this agreement might face challenges in the CJEU as well.