For the past couple of years, Meta has been navigating a strange and uncomfortable new reality in Europe. The company that built its fortune on knowing everything about you—your habits, your friends, your secret interests, even the things you only think about late at night—has been forced to change the way it does business. And now, the consequences are showing up in the financial statements. On Wednesday, Meta reported that advertising revenue in Europe grew only 18 percent year-over-year in the third quarter. That sounds like a healthy number, but for a company accustomed to breakneck expansion, it was a clear red flag. Growth had already slowed in the previous two quarters, and this latest figure was significantly weaker than the 33 percent growth recorded in the US and Canada over the same period. For the first time in a long while, the usually confident narrative of global dominance has been replaced by one of regional hesitation. Europe has not turned its back on Meta—people still scroll Instagram and Facebook by the hundreds of millions—but the company is learning that giving people actual choices about their personal data comes with a price. And in this case, that price is being paid in euros, pence, and lost advertising growth.
The source of this slowdown has a name: the Less Personalized Ads option, or LPA for short. It all started when European regulators decided that Meta was not living up to its obligations under the Digital Markets Act, a landmark law designed to keep giant tech companies from abusing their power. The core issue was consent. Under EU rules, Meta could not simply assume that people wanted their personal data used to shape every single ad they saw. Users needed a meaningful alternative—a version of Instagram and Facebook that was still free and fully functional but did not rely on sweeping, intimate data collection to target them with advertisements. Meta did eventually offer an alternative, but at first it was not free. Instead, it introduced a paid, ad-free subscription in November 2023. The European Commission was not impressed. It ruled that charging people to protect their privacy did not satisfy the law and hit Meta with a fine of €200 million. So at the beginning of this year, Meta rolled out the LPA option for free. Now, anyone in Europe can choose to use the platform without having their personal data mined and packaged for advertisers. The company has never disclosed exactly how many people have selected this option, but the numbers are clear enough: since the rollout, advertising growth in Europe has slowed steadily. Analysts, investors, and company insiders have all reached the same conclusion. Grace under pressure has given way to quiet concern.
The slowdown is not just a directional shift; it is a measurable change in the company’s momentum. To understand what happened, you have to look at the trajectory. In the two quarters before the full LPA rollout, Meta’s advertising growth in Europe was already cooling, falling from around 40 percent to 24 percent. Then came the option itself, and the figure dropped further to 18 percent. In the US and Canada, by contrast, advertising growth accelerated from 31 percent to 33 percent over a similar period. That divergence tells a powerful story. It is not that the broader digital advertising market is collapsing; it is that something specific is happening in Europe. The company’s chief financial officer, Susan Li, had warned investors about this as early as July. During a call following the second quarter results, she said plainly that the less personalized ads offering was now fully rolled out in Europe and that it “may be an additional headwind.” It was a carefully worded statement, the kind of restrained corporate language that tries to prepare the market for bad news without sounding alarmed. But the message was clear. Meta knew this was coming. What is perhaps most telling is that the impact has not been uniform across the company’s operations. While Europe slows, North America accelerates. The same platform, the same products, the same ad systems—but a completely different regulatory environment and a very different consumer experience. It is hard not to see Europe as a kind of experiment in what happens to Meta when it is forced to respect privacy more deeply, and the early results are not pleasant for the company.
For advertisers, the shift is deeply felt. Meta has said that LPA uses 90 percent less data than traditional personalized ads. That is a staggering reduction. Without all that precious behavioral history—without the knowledge of what you clicked last week, what you lingered on, what you abandoned in your cart—the advertising engine loses its magic. LPA ads are based on a much narrower set of signals: what a person happens to look at during a particular session on the site, along with a few basic facts like age, location, and gender. It is a bit like trying to recommend a book to someone after seeing them pick up a single magazine at an airport. There is some context, but not enough to be truly insightful. Meta has been honest about the consequences. In its response to the EU ruling, the company warned that less personalized ads are less efficient, lead to fewer transactions, and result in more ads being dismissed as irrelevant or repetitive. That warning has now shown up in the economic data. The price advertisers are willing to pay for each ad in Europe is growing much more slowly than it is in North America. In simple terms, ads in Europe are worth less because they are less likely to work. Advertisers are still spending money—they have to, if they want to reach consumers—but they are adjusting their budgets and expectations. For small businesses especially, this is a significant challenge. Every wasted impression is money out of the door. When the ad recommendation engine loses 90 percent of its data, it also loses a great deal of its power to connect a brand with the person who genuinely wants to see it. The result is a worse experience for everyone: users see ads they do not care about, advertisers pay for attention they do not receive, and Meta watches its growth numbers fade.
Meta, of course, is not simply sitting back and accepting this fate. The company has been quick to argue that it has room to grow and innovate even under the new rules. Susan Li told investors that Meta has “a lot of runway” to increase ad conversions and improve efficiency. She described the work as an ongoing effort to find ways to enhance the performance of the recommendation engine itself—the advanced algorithms that decide which ads to show to which people. On its face, that may sound like wishful thinking. If you take away the fuel, how can the engine run faster? But Meta believes that artificial intelligence can help. The recommendation engine might not know your exhaustive history anymore, but it can still learn patterns, detect context, and make smarter guesses based on the smaller amount of data it is allowed to use. Dominic Ball, an equity research director at Rothschild & Co Redburn, shares some of this optimism. He told WIRED that he believes Meta will be able to use AI to improve ad targeting in Europe, even with fewer personal data signals. It is a bold hope, but not an unreasonable one. AI models are getting better at predicting human behavior with less information. They can find meaning in smaller datasets, spot patterns that are not obvious, and make real-time adjustments that compensate for missing context. Whether this will be enough to close the gap with North America remains an open question. But for investors, it is at least a thread of hope to hold onto. The story is not over yet. Europe is not a lost cause; it is a puzzle to be solved.
And then there is Muse. In the middle of all this uncertainty, Meta has introduced its personal AI agent, a consumer-facing product that may represent the next chapter of its advertising business. During the earnings call, investor questions were dominated by curiosity about this new tool. It is easy to understand why. On the surface, Muse is a conversational assistant, a way for people to interact with Meta’s AI directly. But beneath that surface, it is also a gleaming doorway back into the world of personalization. Susan Li noted that people who use Muse are showing “high commercial intent.” They are asking for product recommendations, researching alternatives, comparing options, and basically telling the AI exactly what they want. That is a treasure trove of signals, even if it comes from a different kind of interaction than traditional ad tracking. The hope is that Muse will eventually be integrated into the advertising market, allowing Meta to monetize these conversations in ways that are consistent with the new regulatory environment. It is a delicate balancing act. On one side, Meta has to respect European privacy laws and offer real choice to users. On the other side, it still has to generate enormous amounts of revenue to satisfy shareholders. The LPA option may have slowed growth in Europe, but it has not destroyed the company’s ambition. Instead, it has pushed Meta to think differently about how to understand people. The ultimate question is whether users will accept this new model—whether they will see AI assistants as helpful companions or just another way for the same old advertising machine to learn their secrets. For now, the future is still being written. But one thing is certain: the era of frictionless, invisible data collection is over, at least in Europe. And Meta is now trying to prove that it can still thrive in a world where people have a choice.
