Microsoft stashes nearly half a billion in case LinkedIn data drama hits
Irish regulators sniffing around Facebook-for-suits subsidiary have threatened fine
Microsoft has warned investors about a "non-public" draft decision by Irish regulators against LinkedIn for allegedly dodgy ad data practices, explaining it had set aside some cash to pay off any potential fine.
How much? Oh, a mere $425 million. Pocket change really. The software giant said the funds were connected to a 2018 investigation by the Irish Data Protection Commission (IDPC) looking into whether LinkedIn's targeted advertising practices violated the the European Union's General Data Protection Regulation (GDPR).
At the time of the complaint [PDF], the 2016 law had been recently implemented and the watchdog was just settling into its role as EU overlord of judging data practices of the tech giants.
Microsoft denies it broke any GDPR rules and said it "intends to defend itself vigorously in this matter."
Why is the Irish Data Protection Commissioner de facto tech law watchdog for EU?
The Irish watchdog oversees these cases because various tech giants set up EU shop here for the easy-breezy tax rates. That includes Alphabet, Microsoft, Meta, Twitter, Amazon, Etsy, Zalando, Groupon, PayPal, AirBnB, Uber, Siemens, HP, Intel, Dell, Symantec, EA, Zynga, Adobe, Dropbox, Salesforce and SAP.
The Republic of Ireland has one of the lowest corporate tax rates in Europe at 12.5 percent. There are places elsewhere in Europe with lower rates, but Ireland is the only one within the EU, which gives it crucial access to the single market. The only place in the member state coalition that charges less tax is Hungary, which pulls in just 9 percent from businesses.
Microsoft said of the watchdog's action that it had "cooperated throughout the period of inquiry."
It said the IDPC had allowed LinkedIn to have a look at "a non-public Preliminary Draft Decision that proposed a fine" in April this year. It added: "After review and analysis, the company will increase its existing reserve for the matter and, based on current exchange rates take a charge of approximately $425 million in the fourth quarter of fiscal year 2023."
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It's not a done deal, though, as Microsoft intends to fight the action and will dispute both "the legal basis for, and the amount of, the proposed fine and will continue to defend its compliance with GDPR."
There is no "set timeline" for the IDPC's final decision.
It's not Linkedin's first tryst with the regulator. Early on in the life of GDPR, LinkedIn stopped displaying a member-to-guest connection invitation screen on the platform after "numerous engagements with the DPC."
The invitation previously allowed for the syncing of the address books of its European members, according to the IDPC, but the Facebook-for-suits outfit then "removed this feature in Europe." The IDPC said at the time that it viewed this as "a positive step taken by LinkedIn Ireland in meeting its GDPR requirements, particularly for the processing of non-user data." ®