Austrian Group Questions Meta’s ‘Legitimate Interest’ In Using EU Data For AI, Threatens Legal Action Over $200 Billion: '...Making Money Is More Important Than The Rights Of Its Users' - Alphabet (NASDAQ:GOOG), Apple (NASDAQ:AAPL)

Austrian advocacy group, NOYB, is gearing up to seek an injunction against Meta Platforms META, potentially leading to billion-euro damages claims. This action comes as a response to Meta’s plans to use Europeans’ personal data for AI training.

What Happened: NOYB, the group spearheaded by privacy activist Max Schrems, issued a “cease and desist” letter to Meta on Wednesday. Meta intends to start using personal data from European Instagram and Facebook users from May 27. The company has defended its actions under EU privacy rules, claiming a legitimate interest in using user data to train its AI models and other tools, which may also be shared with third parties.

Last month, the Mark Zuckerberg-led company announced that users can object to their data being used for training via a provided form and assured that private messages and data from users under 18 will be excluded from training.

Schrems criticized Meta’s rationale, questioning the company’s ‘legitimate interest’ in using user data for AI training. He suggested potential injunctions and a class action for non-material damages, noting that if 400 million European Meta users each claimed €500, the total could reach €200 billion ($224.62 billions).

“While the ‘legitimate interest’ assessment is always a multi-factor test, all factors seem to point in the wrong direction for Meta. Meta simply says that it’s interest in making money is more important than the rights of its users,” said Schrems.

NOYB has given Meta a May 21 deadline to respond, proposing user opt-in options and clearer AI training terms to comply with EU privacy regulations.

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Why It Matters: This development follows a series of events that have put Meta under scrutiny. In February, Meta and Alphabet GOOG GOOGL criticized Europe’s stringent AI regulations, arguing that these rules were hampering the growth of the region’s tech industry.

In April, Meta and Apple AAPL were fined nearly $800 million for violating the European Union’s Digital Markets Act. Meta was also found to be profiting from its Llama AI models through revenue-sharing agreements with host businesses and facing lawsuits regarding the same.

While other tech giants like Microsoft MSFT have committed to adhering to European laws, Meta’s stance has been met with criticism and potential legal action.

Meta holds a momentum rating of 87.81% and a growth rating of 75.91%, according to Benzinga’s Proprietary Edge Rankings. The Benzinga Growth metric evaluates a stock's historical earnings and revenue expansion across multiple timeframes, prioritizing both long-term trends and recent performance.

Meta stock surged more than 39% over the past year.