Meta has announced that it is considering shutting down both Facebook and Instagram in Europe if they are not allowed to keep transferring user data back to the US. On January 27, Meta released their annual report where this warning was issued.
Over the past several years, Regulators in Europe have been no strangers to taking a stand against big tech companies. Just last November, Google lost $2.8 billion in fines in an EU antitrust case, and in April, Apple was hit with Antitrust Violations from the EU.
But now, Regulators in Europe are drawing up new legislation that will dictate how EU citizens’ user data is transferred across the Atlantic.
According to Facebook, “If a new transatlantic data transfer framework is not adopted and we are unable to continue to rely on SCCs (standard contractual clauses) or rely upon other alternative means of data transfers from Europe to the United States, we will likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe.”
You’d think that losing out on two of the four most popular social media apps would make lawmakers hesitant to go through with these changes. But European lawmaker Axel Voss tweeted “Meta cannot just blackmail the EU into giving up its data protection standards… leaving the EU would be their loss.”
Fully leaving the EU seems like a huge step for Meta, and an unlikely one at that. But then again, in February of last year, Meta did cut off all Australian news publishers from its platforms due to a dispute over revenue share, showing that it is willing to take big action in certain cases.
Meta does already operate data centers in Ireland, Sweeden, and Denmark, and it just recently applied to build another in the Netherlands. So it isn’t impossible for Meta to align with any new EU requirements if they had to, but it would be a massive undertaking. Doing this would also limit user data analysis at a time when they are already dealing with reduced capacity thanks to Apple’s iOS 14 update.
If Meta continues to operate out of Europe but does not comply with the new regulations, they could be fined for up to 4% of its annual revenue, or $2.8 billion.
If Meta chooses to keep their data in Europe, the EU will massively benefit from this because of tax obligations. If Meta is operating out of Europe, then Meta will have to pay its fair share in each region where they are operating. This is a much longer bow, and not the primary focus of the proposal, but the concept is that such regulations ensure data sovereignty in each region, which would also relate to governance in other areas too.
There are over 400 million users in the EU, and was the only region where it saw any significant growth, with an increase of 4 million monthly active users. Is this a market that Meta is willing to cut off? Only time will tell.
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