ruling on Facebook is a major blow to the use of first-party data //

Facebook and other tech companies will find it difficult to monetize first-party data within the European Union following yesterday’s ruling by the EU top court, which rejected Facebook’s “legitimate interests” argument in favor of personalized ads.

What it means. Tim Parkin of Parkin Consulting says that the ruling is a slap in the face for many large tech companies.

He says, “It is easier to hit a larger target. That’s what the regulators want to do.” “If they could stop (or even slow down) Meta they would prevent other big tech companies from creating the same problems.”

Parkin believes that this and other EU measures will end the current digital marketing paradigm.

He says that “the bigger concern for big tech is the war on data protection and privacy,” which is intensifying. “The business model that made the customer into the product used to be viable, but is now under threat. We will continue to see the big tech companies move away from free platforms and towards subscription-based services.

What happened? Facebook parent Meta filed a lawsuit against German regulators in 2019 who had ordered Facebook to stop collecting data from users without their consent. They claimed that Facebook was not only violating the GDPR of the EU, but also that its dominance on social media made it an antitrust matter.

Dig deeper: EU fines Facebook $1.3 billion for privacy violations

The ruling. According to the ruling, Facebook’s “legitimate interests” in personalizing ads are overridden by users’ privacy concerns. The ruling said that although Facebook is free for users, they cannot expect that the network will use large amounts of data to customize ads without their consent.

Matt Moorut, Gartner’s Matt Moorut, says that the decision should not have been a surprise to anyone.

“The European Union is fighting for better protection of consumer data for many years. The ruling, although a surprise for its timing, was not a huge surprise for its existence,” Moorut, Gartner Marketing Practice director analyst, says. “GDPR already established opt-ins to use data for email years ago. This is a continuation of principles already codified.”

What’s next. The ruling is only applicable to Germany. However, a new EU digital competition law that will be implemented soon will impose similar regulations across the EU. The Digital Markets Act will require services with 45 million active EU monthly users to obtain user consent starting in March next year.

• Process personal data of users
• Combining it with other platforms
• Data can be used from one service for another.

Users must be allowed to continue using the service even if they do not consent.

Why we care. First-party data is touted as being the most reliable and accurate source of information for consumers, especially with the imminent end of third-party cookie usage. There’s reason to doubt this, at least in the EU.

This is not something that marketers need to be concerned about in the U.S. because they have yet to implement even more basic privacy protections at the national level. It will complicate the collection of data and its use for businesses doing business in Europe.

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