The EU's top court has dealt a major blow to tech giants such as Facebook by ruling against the company's "legitimate interest" argument for personalized ads using first-party data. This ruling signals an end to the current digital marketing paradigm, as businesses will now be unable to rely on user data to construct tailored advertisements.
Tim Parkin, president of Parkin Consulting, believes this is part of the EU's attempt to regulate big tech companies and protect user data from misuse. This ruling follows a 2019 lawsuit wherein Facebook was ordered to stop collecting user data without consent, violating the EU's GDPR. The top court determined that users' privacy interests should take precedence over Facebook's ability to personalize ads, and that this should not be expected without their consent.
The implications of this decision go beyond just Facebook, as it will affect any business doing business within the EU. Starting in March 2021, the Digital Markets Act will require services with at least 45 million monthly active EU users to get user consent to process personal user data, combine it with data from other platforms, and cross-use data from one service to another.
This ruling could have a profound effect on the way businesses collect and use data. Companies will have to consider pivoting to subscription-based models and away from ad-supported platforms, as it will no longer be viable to rely on user data to personalize advertisements. Even businesses in the US who do business in the EU will be affected, as this ruling will further complicate data collection and use.
Overall, this ruling serves as a warning to tech giants and other businesses that user privacy should be taken seriously and that data collection and use should be done with consent.
Originally reported by Martech: https://martech.org/eus-ruling-against-facebook-a-big-blow-to-first-party-data-usage/
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