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Leading social media giant Meta Platforms Inc. has warned the regulators in Europe that it could be forced to shut down Facebook and Instagram operations in the region if it’s not allowed to transfer users’ data back to its headquarters in the US.
Warning the regulators through an announcement in its annual report, which was published last week, Facebook said that if it’s not allowed to transfer users’ data from Europe to its US headquarters as per the new transatlantic data transfer framework, then it won’t be able to offer their most significant products and services, including Facebook and Instagram, in Europe.
The European regulators are in the process of chalking out finer points of the new legislation. After the Privacy Shield agreement between the US and the European Court of Justice in 2020, the point of data transfer has been the topic of discussion for both parties. This further makes one think should the data be transferred or whether both parties should work towards a solution that is acceptable to both the sides.
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Meta’s tough stand
European lawmakers pulled their weight behind the continuation of the data transfer ban. Many lawmakers such as Axel Voss suggested that Meta cannot hold the EU to a ransom and pulling out of EU, in fact, would be their loss.
Image Credit: Twitter @AxelVossMdEP (Axel Voss MdEP)
Voss said both parties need to take a balanced approach to data exchange and should look for General Data Protection Regulation (GDPR) flexibility.
In fact, data protection authorities have been stringent when it comes to protecting sensitive information. Ask Patrick Van Eecke, Partner and head of cyber and data at law firm Cooley LLP, said that this constant data transfer in the absence of an agreement has been a critical issue for some time and has reached a point where firms outside Europe are reconsidering offering their services to the European markets.
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How will it affect UK consumers?
UK’s Facebook and Insta services could be severely impacted if Meta decides to pull the plug. The users may be at risk of losing out on personal data, which they have uploaded on these social media platforms.
It would hurt Meta as well as it has a vast market in the UK and is one of the regions for the company in terms of revenue.
On the other hand, the UK themselves have some stringent laws when it comes to data protection. It has previously issued warnings to other tech giants, such as Google and Apple.
The Competition and Markets Authority (CMA), on its part, has said that both the firms have managed to create a form of duopoly in the market. This has left millions in the UK losing out on unique mobile experience by blocking other rivals’ unique services.
Conclusion
Meta generally gets its revenue from personalized ads which are derived from users’ data. It got a major setback after Apple introduced its privacy policy that barred any firm from tracking users’ preferences. That led to major losses. Meta lost around US$200 billion in stock market value after it announced its quarterly report, wherein it declared that its Daily Active Users have gone down majorly in Q4 2021 due to these new rules.
Other social media platforms too reported a similar decline in daily numbers. Meta also reported that there was decline in revenue as youngsters were choosing Instagram over Facebook for its reels, which led to further loss in revenue.
