A few days ago, Meta revealed many interesting things in its annual earnings report. One of the things that stood out was that Meta may have to completely stop managing two of its platforms, Instagram and Facebook, in Europe.
European data regulations prevent Meta from storing European data on U.S. servers. This is a problem for the company because user data is very important. Meta manages its business and ad targeting by processing user data between countries.
European laws, such as the General Data Protection Regulation (GDPR), prevent a company from collecting user data. As a result, the company is having trouble doing business with its services in Europe. That’s why Meta is threatening to shut down Instagram and Facebook in Europe.
Meta’s stock dropped by 25% after the company lost daily active users for the first time in its existence, according to a financial report released last week. This indicates that the firm is merely attempting to put itself in a better negotiating position rather than intending to follow through on its threats.
How They See the Situation in Meta and Where the Threat of Shutting Down Comes From
In the official statement, the California-based multinational technology conglomerate said that if it’s unable to transfer data between the countries and regions in which it operates, or if it’s prohibited from sharing data between its products and services, it could affect its ability to provide its services, the way they provide its services, or its ability to target ads.
The company explains that there’s the possibility of reaching new agreements in 2022. If it doesn’t, Meta is unlikely to be able to offer a range of its most significant products and services, including Facebook and Instagram, in Europe. While this might be good news for some people, many small businesses rely on Facebook and Instagram ads. These companies, even those here belonging to niches for which advertising on Facebook is restricted in many areas, such as the casino gambling niche, use it to connect with customers and sell their products and will be struck with the possible shutdown of the two platforms.
The European Court of Justice threw down the Privacy Shield, the existing data transfer agreement between the United States and the European Union, in July 2020, on the grounds that it doesn’t effectively safeguard European residents’ privacy.
What did European officials have to say? Axel Voss, a European legislator, stated on Twitter that he has long advocated for an alternative to the EU-US privacy shield in order to achieve a more balanced data flow deal. Meta can’t force the EU into abandoning its data protection regulations, he added, because leaving the EU would be their loss. Others, like Germany’s new economy minister Robert Habeck, believe that life would be better without Meta. He emphasized that he had gone four years without using Facebook or Twitter after being hacked, and that life had been great to him. His French Finance Minister colleague, Bruno Le Maire, agreed, saying that life would be pretty nice without Facebook, and we would live very well without it.
On the other hand, Meta, i.e. its media representative, stated that the firm has no plans to leave Europe and has highlighted similar concerns in past filings. Nonetheless, he highlighted that Meta, like many other firms, organizations, and services, relies on data transfers between the EU and the United States to operate worldwide services.