Mass redundancies at big tech firms like Meta have largely been characterised as a post-pandemic correction after a feast of hiring during the Covid crisis. But there is something more complicated going on at the Facebook owner that has been buffeting the social media giant’s advertising revenues. The decision this week by European Data Protection Board (EDPB) may compound those difficulties.
Details of the EDPB ruling are closely guarded for now. However, sources have indicated that the board has ordered the Irish Data Protection Commission (DPC) to revise three rulings it has delivered in relation to data collection by Meta platforms Facebook, Instagram and WhatsApp.
The upshot of all of this is that the DPC is now expected to issue revised rulings within the next month that could significantly undermine or even upend the legal basis that Meta relies upon to collect data from European users, which it uses to sell and tailor ads.
Meta is awaiting the DPC’s final decision, which it will be able to appeal. It could take years before the changes are felt at the company.
However, Meta is also facing more pressing headwinds on the advertising front. Last year, Apple substantially changed its privacy policy, making it more difficult for the likes of Facebook and Instagram to glean precious information about users on IOS devices. By Mark Zuckerberg’s own admission, this was one of the factors driving Meta’s revenues lower over the past year, copper-fastening the decision to shed 11,000 jobs globally. As Eric Seufert, a US-based media strategist and analyst, highlighted in a blog post, where Meta and Google once dominated growth in advertising revenues, Apple’s changes have undermined their positions (and given itself a bigger slice of the pie in the process).
To be sure Meta remains a behemoth: while revenue declined 4 per cent in the third quarter, it still made a $4.4 billion (€4.1 billion) profit. As a company, it’s not heading to the poor house.
Yet between Apple’s change and the Irish DPC’s inbound ruling on the legal basis it uses to collect European user data, Meta may be staring down the barrel of permanent, structural shifts in how it generates revenues.
