A court in Madrid, the capital of Spain, ordered Meta to pay a total of 479 million euros in compensation to 87 digital media organizations on the grounds that it gained an unfair competitive advantage by unlawfully processing personal data. The decision was made based on data collection practices that contravene the European Union General Data Protection Regulation (GDPR) and Spanish competition laws. The court emphasized that the online advertising revenues the company obtains in this way negatively affect the revenues of media organizations.
After the GDPR came into force in 2018, Meta changed the legal basis it used to collect user data on Facebook and Instagram platforms. The company abandoned its data processing model, which was previously based on user consent, and turned to the claim that the data was “necessary for the performance of the contract”. However, regulatory authorities in Europe found this approach invalid and criticized Meta, and the company returned to the user consent-based model in 2023.
Court: Meta gained an unfair advantage in competition
The Madrid Court found that Meta’s data collection practices undermined the competitiveness of Spanish digital media organizations in the online advertising market. The court stated that the company processed users’ personal data without permission in order to increase advertising revenues, and this caused loss of advertising revenues of local media organizations. Therefore, the amount of compensation was calculated in proportion to the advertising revenues Meta earned during the five-year period.
The following statements were included in the decision text: “The unlawful processing of such a large amount of personal data has given Meta an advantage that Spanish online media organizations cannot reach. This situation has directly damaged the advertising revenues of local digital media.” It was especially noteworthy that small and medium-sized digital publishers could not compete with Meta’s data access.
In addition, Meta’s extensive use of user data in advertising targeting enabled the company to run more effective advertising campaigns. The inability of local media organizations to target at this level of detail made competition even more difficult.
Meta finds the court’s decision unfair and announced that he will appeal. In a statement to Reuters, the company argued that the decision was not based on any harm and ignored basic facts about how online advertising works. Meta also claimed that by providing transparent information to its users, it provides them with the necessary tools to control their experience and complies with all legal regulations.
Regardless, the data processing model used by Meta between 2018 and 2023 has been associated with serious losses by digital publishers in Spain. For this reason, the compensation decision given in the lawsuit indicates that large technology companies in Europe should be subject to stricter supervision not only in terms of privacy but also competition law.
Meta had previously faced fines in various European countries for similar reasons. For example, the Irish Data Protection Commission has imposed many fines on the company in recent years.