Meta faces a sentence of 479 million for illicit advertising advantage based on personal data according to a Madrid court

The fight between Meta and the Spanish media over digital advertising has just crossed a line that, until now, no one had crossed. A commercial court of Madrid has condemned the parent company of Facebook and Instagram to pay 479 million euros to 87 digital press publishers and news agencies due to unfair competition in the advertising market, by relying on the irregular use of personal data to sell advertisements with an advantage over their rivals.

The origin of the case: personal data converted into advertising advantage

The demand came from a large group of media, channeled through their associations, which They claimed more than 550 million euros. The judge does not reach that figure, but he does assume the central idea: Meta would have built part of its advertising business in Spain on data processing that did not comply with the General Data Protection Regulation (GDPR)and that would have allowed it to offer an advertising product that the media could not match without breaking the rules.

The key turn is in 2018, with the entry into force of the GDPR. Instead of relying on the user’s explicit consent, Meta went on to justify a good part of the data processing in the “execution of the contract”a much more debatable legal figure when applied to personalized advertising. The judge considered that this legal basis was not valid for using user information for such invasive commercial purposes, and that, therefore, the ad segmentation that was built on that data was illicit.

This ability to design hyper-segmented campaigns (knowing who is who, what they do and what they are interested in) is what would have put Facebook and Instagram several steps ahead of digital media, which were forced to adhere to stricter interpretations of the GDPR. This is where the core of the conflict lies.: The advantage comes not just from scale or technology, but from not playing by the same rules.

Article 15 of the Unfair Competition Law: when breaking the law is expensive

To sustain the conviction, The judge relies on article 15.1 of the Unfair Competition Lawwhich qualifies as unfair to obtain a competitive advantage by violating mandatory regulations. The GDPR thus goes from being a privacy problem to also becoming a key piece of competition law: if you gain market share by breaking the law, the damage has a direct impact on your competitors.

In practice, the ruling concludes that digital media and news agencies had to compete with a platform that offered more effective campaigns because it was powered by improperly processed personal data.

Five years of business under the magnifying glass and more than 5,281 million in revenue

One of the most striking points of the ruling is how the economic damage is estimated. Meta Ireland, responsible for the advertising business in Spain, did not provide accounts broken down by country. Given this lack of data, the judge resorts to reports from the CNMC and other studies on the online advertising market to calculate what volume of income the company was able to obtain in Spain between May 2018 and August 2023. The result exceeds 5,281 million euros.

From that figure, The resolution delimits what part of that business would have ended up in digital media if the infringement had not occurred.and sets the amount that Meta must pay to the 87 publishers and agencies that have appeared at 479 million.

Beyond the money, the sentence sends an uncomfortable message for Meta: It is not enough to adapt after the fact to what the data protection authorities establish, but the misuse of personal information can also lead to million-dollar claims by competitors.

This ruling adds to other fines and sanctions that the company has received in Europe for privacy issues, and reinforces the idea that the margin for lax interpretation of data processing is being exhausted.

Political reactions and resource horizon

The resolution comes at a particularly tense moment between Meta and the Spanish Government. In parallel to this case, the Executive has accused the company of alleged massive mobile browsing tracking without permission, and has announced that those responsible will have to be held accountable in Congress. In this context, the sentence of almost 500 million reinforces the feeling that the regulatory climate is toughening for large platforms.

From the political sphere, some members of the Government have taken advantage of the ruling to insist on the idea that no technology multinational is above the lawand to claim the need for a European digital model that combines innovation with guarantees.

What’s next for the media and the advertising market?

If the sentence is maintained in the following phases, the impact will be double. On the one hand, it will mean a significant economic injection for the media that have litigated for years. On the other hand, it sets a precedent: using personal data to the limit or above what the GDPR allows is no longer just a problem with regulators and also becomes a risk to competitors.

It remains to be seen if this pronouncement translates into real changes in the distribution of advertising investment or a new balance between media and platforms.