Microsoft has announced that it is anticipating a substantial penalty for LinkedIn, the company’s job-oriented social networking platform, following an investigation by the Irish Data Protection Commission (IDPC). The tech giant has estimated the fine could reach a staggering $425 million, an amount largely prompted by accusations of LinkedIn violating data privacy laws.

The investigation was instigated in 2018, with a specific focus on the practices LinkedIn employed for targeted advertising. This centered on a possible breach of the European Union’s stringent General Data Protection Regulation (GDPR).

Microsoft Azure OpenAI ChatGPT

In April of this year, LinkedIn received a preliminary draft decision proposing a significant fine. However, details of this draft decision have not yet been released to the public. Despite the uncertainty surrounding the final verdict, Microsoft is bracing for the potential financial impact.

The company stated, “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 $425m in the fourth quarter of fiscal year 2023.”

Microsoft has made clear its intention to respond to the draft decision and is prepared to legally defend its position. There is currently no set timeline for when the IDPC will issue its final decision.

The 2018 probe was not the first time LinkedIn has found itself in the crosshairs of the IDPC. In 2020, the social networking platform made the decision to cease displaying the Member-to-Guest Connection invitation screen, a feature previously created by syncing the address books of its European members. This move was initiated after numerous engagements with the DPC and was seen as a positive step towards meeting GDPR requirements.

This development comes on the heels of a report last month that LinkedIn is set to slash 716 jobs across sales, operations, and support operations due to diminished demand. Additionally, the company has decided to close InCareers, a platform focused on China.

If the proposed fine is enforced, Microsoft would join the ranks of US-based tech companies hit with major penalties by European regulators for data privacy infringements. In May 2023, Meta, the parent company of Facebook and Instagram, was hit with a record $1.3 billion fine by the IDPC.

The impending fine and the subsequent restructuring at LinkedIn underscore the challenges faced by tech companies in the global environment, where privacy laws can vary significantly and non-compliance can result in hefty penalties. As Microsoft and other technology firms navigate these waters, adherence to privacy regulations will continue to be a critical concern.