A combined $7.7bn worth of regulatory fines for breaching data privacy laws over ad-targeting practices has been handed out to Alphabet, Amazon, Byte Dance and Meta since the start of 2023, according to a new report.
GlobalData’s Thematic Intelligence: Social Media report explores key technological, macroeconomic and regulatory trends within the social media industry. It outlines that data privacy and human rights are core considerations around the evolving regulation of the social media industry.
While social media is often thought of through the lens of networks like Meta’s Facebook and Instagram, ByteDance’s TikTok and Douyin and Microsoft’s LinkedIn, the report identifies five other overlapping categories of social media. These are discussion forums such as Reddit, media-sharing sites such as YouTube, consumer review networks like TripAdvisor, sharing economy companies like Uber and Airbnb and messaging services like WhatsApp and WeChat.
The report highlights that, although social media sites appear free at the point of use, an exchange still occurs between consumers and platforms with consumers providing attention and personal data in exchange for the use of the platform. Personalised ads are how social media platforms typically generate the bulk of their revenue, but this model is being challenged by increasing regulation and consumer concerns.
Social media regulation
One of these regulatory changes was the European Court of Justice’s ruling that due to the EU’s General Data Protection Regulation, Meta “cannot justify processing user data without the user’s consent”. This means that Meta and others cannot personalize advertisements to the extent they once did, affecting their revenue streams.
New regulations concerning social media have also been announced in 2023, such as the UK’s Online Safety Act and the EU’s Digital Service Act.
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Due to consumer concerns about the use of personal data and content moderation, the report suggests that smaller decentralized apps may become more popular.
Amelia Connor-Afflick, senior analyst at GlobalData, comments: “The unprecedented €1.2bn ($1.3bn) fine the EU Commission imposed on Meta for illegally transferring personal data was a significant development in this space. The issue resulted from a conflict of EU-US law, which should be ironed out under the EU-US data protection sharing pact. This pact, finalized in July 2023, allows companies, including social media platforms, to transfer data between the US and EU.”
Of the non-homogenous nature of regulation, Connor-Afflick continues: “Other democratic jurisdictions, however, do not have the same safeguards. The US lacks a comprehensive data privacy law, but California, Utah, Colorado, Connecticut, and Virginia will have state-level data privacy legislation by the end of 2023. In the UK, the Online Safety Act (2023) aims to make the internet a safer place for users. It obliges messaging services, including end-to-end encrypted apps like WhatsApp and Signal, to scan conversations for child abuse material.”
This year, there have been more discussions over large social media companies’ considerations of human rights risks and online harm. In 2023, Meta was embroiled in a lawsuit regarding the use of its platform and algorithms to amplify hate and violence in the Tigray War in Ethiopia.
Connor-Afflick explains: “Frances Haugen’s whistleblowing of internal documents from Meta revealed how the Facebook and Instagram algorithms perpetuate harmful and inciteful posts. This includes posts in the context of violence and war, which has seen online violence spill into offline violence. Meta faces legal action by victims of Ethiopia’s Tigray War, who claim that certain posts directly led to people being targeted and killed.”