Meta’s business model is crumbling in Europe
It has been 15 days since the launch of Threads and the media razzle dazzle about it has become impossible to avoid. Meta’s new Twitter-like service, which various outlets have casually termed a “Twitter killer,” racked up more than 30 million users by the end of its July 5 launch date, and topped 100 million by July 10. Whew! Zuck must be getting champagne flute emojis in record numbers.
But hang on – let’s pause for a quick calendar check. Threads debuted on July 5. Sure, it was just after a holiday weekend in the U.S. But it also came on the heels of something much more consequential for the company. On July 4, the European Court of Justice issued a historic ruling that undermines Meta’s legal justification for serving targeted ads in the EU and empowers competition regulators to go after the company on data protection grounds. Legalese aside, this ruling could effectively blow up Meta’s business model in the region, and has put the company’s operations there into serious jeopardy. I recommend Jason Kint’s breakdown if you want the legal nitty gritty. But the bottom line is that Meta is in big trouble for collecting tons of user data without sufficient consent and then mixing and matching it across its services. This is the engine driving the creepily precise ad targeting jiu-jitsu for which Meta is so well known and upon which its business model is based.
If Zuck is emoji-toasting Threads’ success with one hand, chances are good that with his other hand he is feverishly texting the heaviest of his legal and political heavyweight pals like never before.
The effects of the ruling are already playing out. Norway’s data protection authority stepped up last Friday and temporarily banned Meta from engaging in “highly opaque and intrusive monitoring and profiling operations” (AKA serving targeted ads). Beginning on August 4, Facebook and Instagram will be allowed to serve ads to users, but those ads may only draw on information that appears in the “about” section of users’ public profiles.