The entire continent of Europe could be living in a near Meta-less universe in the near future.
The social media mega issued a thinly-veiled threat to the European Union in its annual report to the U.S. Securities and Exchange Commission last week saying it would “likely” shut down Facebook and Instagram throughout the continent if its ability to transfer and store Europeans’ user data on American servers continues to be interrupted.
Meta’s gripe centers on a duo of Summer 2020 legal rulings addressing privacy protections for Europeans related to user data transfers. In July 2020, the European Court of Justice ruled that current data transfer standards meant to protect Europeans’ user data between the EU and U.S. were inadequate under the EU’s tougher privacy laws. The decision cited Europeans’ inability to challenge surveillance of their data by the U.S. government while being stored on American servers as a key issue.
The ECJ ruling invalidated the EU-U.S. Privacy Shield framework for data transfers that had been in place since 2016, but maintained that Standard Contractual Clauses were still valid for use in transatlantic data transfers. But Meta and its use of SCCs came under fire directly from Ireland’s Data Protection Commission in August 2020. The Irish High Court sided with the DPC’s provisional order that SCCs cannot be used for data transfers as they leave Europeans’ data far more exposed under U.S. law as compared to the EU’s GDPR privacy standards.
Meta challenged the ruling and a final decision from the DPC is expected in the first half of 2022. If the DPC’s stance is upheld, Meta would have to corner off most European user data and could face billions in fines for non-compliance.
User data is the lifeblood of Meta’s various social media platforms, and any interruption in data flow poses a big impact for one of the company’s major revenue streams: targeted ads. Meta VP of Global Affairs and Communications Nick Clegg has couched the data transfer issue as a detriment to small businesses and start-ups in statements this week, but any interruption in the company’s ability to move and store user data threatens Meta’s ability to capitalize on said data for ad sales purposes.
As the company stated during its latest earnings call on Wednesday, Meta’s ability to target advertisements to users is already being impacted by Apple’s App Tracking Transparency measure to a degree that it isn’t able to measure precisely at the moment. ATT’s impact already forced Meta to cut its expected overall revenue for 2022 by $10 billion, and losing the ability to capitalize on users from an entire continent wouldn’t help matters.
All of this could be wiped away if EU and U.S. officials are able to reach an agreement on a new framework to replace the Privacy Shield, something that both sides stress is happening. But Meta’s threat isn’t helping those negotiations, nor is it shaking proponents of stricter privacy protections.
“Meta cannot just blackmail the EU into giving up its data protection standards,” European lawmaker Axel Voss, who helped develop the EU’s data privacy measures, said via Twitter. “Leaving the EU would be their loss.”