The Mark Zuckerberg company Meta, which owns both Facebook and Instagram, may be ready to pull out of the European market over a disagreement on U.S. surveillance protections. Unless the company is allowed to transfer information from European users to be processed in the United States, the social media behemoth will lose a significant chunk of valuable revenue. But the European Union says that handing over customer data that is accessible to the American government is a non-starter.
Where’s This Coming From?
In July 2020, the European Court of Justice ruled that the data transfer standard between the United States and the E.U. did not protect the privacy of European citizens. As the highest legal authority of the region, the court determined that citizens had no practical way to challenge American government surveillance of their information when it is moved back to the United States. The National Security Agency and other federal agencies can request internet companies such as Facebook and Instagram to turn over data on an E.U. citizen without the individual knowing.
Since the court ruling invalidated the E.U.-U.S. Privacy Shield agreement, internet companies have relied on standard contractual clauses (SCCs). But that has only been a short-term solution. Regulators are presently crafting new legislation that will determine how user data can be transmitted across the Atlantic.
It appears Meta is less concerned with privacy and more with its profits. Meta is “unable to continue to rely on SCCs or rely upon other alternative means of data transfers from Europe to the United States.” Unless a “new transatlantic data transfer framework” is adopted, the company will “likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe.” Meta claims that the inability to collect and transfer user information would affect its “financial condition” and business operations.
A spokesperson shared that the company has no desire or plans to leave the European region, but it relies on these data transits to operate its global services. However, the SCC Meta utilizes are under judicial and regulatory scrutiny. SCCs regulate user information transmissions but have been criticized by legal experts for not following Europe’s General Data Protection Regulation.
Hard to Believe
It seems unbelievable that Facebook and Instagram would just disappear in Europe, but the company’s bottom line is that if the user data can’t be transferred to the United States, its ad targeting capabilities, which generate most of its revenue, would be highly restricted. The past year has not been the best for Meta overall. Its recent earnings report showed Facebook lost users for the first time in its 18-year history. Mark Zuckerberg and his company have come under fire in the United States and the U.K., with a whistleblower accusing Facebook of fueling hatred and addiction on its platform.
At an event in 2020, Nick Clegg, the company’s head of global affairs, declared, “Let me also be absolutely crystal clear. We have absolutely no desire, no wish, no plans to withdraw our services from Europe. Why would we?” Despite Clegg’s assurances, it appears Facebook may be willing to wave the flag on a European retreat.
This is not the first time Facebook has threatened to withdraw its services from a region. In Australia, back in 2020, a law was proposed that would force Facebook to pay media firms for use of their articles. In response, the social media conglomerate threatened to block users and media publishers from Australia from sharing news. Facebook never followed through on that threat. Many believe that even if regulatory alignment is not reached, the social media giant will continue to operate in Europe.
Instagram and Facebook would not be the same without Europeans included in the user population, and the amount of content would plummet. If the applications were to become unavailable to our friends across the Atlantic, user interaction would be significantly impacted. Zuckerberg, however, has proven himself a talented operator, and if there is a way for him and his company to monetize the platforms through different avenues, it is almost certain he’ll find it.
~ Read more from Keelin Ferris.