EU data laws might see Meta shut down Facebook, Instagram there

• The EU has strict data protection requirements when it comes to the transfer of personal data from Europe to the US
• Meta believes withdrawing its primary services like Facebook, Instagram would have an impact on businesses large and small, across sectors
• Meta is urging regulators to adopt a “proportionate and pragmatic approach” to minimize disruption to thousands of businesses

Despite the emergence of various social media firms, Facebook parent company Meta still holds a dominant position within the industry. In fact, close to half the global population uses its apps. Unfortunately, the numbers may be at risk of falling drastically as Meta is threatening to pull Facebook and Instagram out of Europe.

The declaration was buried in Meta’s annual report to the US Securities and Exchange Commission last week. “If a new transatlantic data transfer framework is not adopted and we are unable to continue to rely on Standard Contractual Clauses (SCCs) or rely upon other alternative means of data transfers from Europe to the US, we will likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe,” it said in the report.

Meta believes the move would “materially and adversely affect our business, financial condition, and results of operations.” For context, the EU has strict data protection requirements regarding the transfer of personal data from Europe to the US. However, the evolving laws and regulations from  European regulators, courts and legislative bodies have increasingly scrutinized, according to Meta, the social giant and its “critical operations”.

How did Meta transfer data for Facebook and its other EU services before?

Until July 2020, Facebook had been relying on a framework known as the Privacy Shield, for data transferred from the EU to the US. It was however invalidated in July 2020, by the Court of Justice of the European Union (CJEU). 

There were also the other bases upon which Meta relies to transfer such data, such as SCCs, and that too has been subjected to regulatory and judicial scrutiny. These model agreements are equally under scrutiny in Brussels and other parts of the EU.

For instance, in August 2020, Meta received a preliminary draft decision from the Irish Data Protection Commission stating that its reliance on SCCs to transfer European data was not in compliance with EU’s General Data Protection Regulation.

“[They] preliminarily proposed that such transfers of user data from the EU to the US should therefore be suspended. We believe a final decision in this inquiry may be issued as early as the first half of 2022,” Meta said. 

Europe without Facebook, Instagram

Back in 2020, Facebook surveyed business owners in Europe to study the impact its social media site has. Surveyed businesses said that using Facebook apps helped them generate sales corresponding to an estimated €208 billion last year. “Using standard economic modeling techniques, this translates into an estimated 3.1 million jobs,” Facebook said.

Businesses also said that tapping into Facebook apps’ revenue-spinning features helped them generate an estimated €98 billion in exports last year. Of these exports, €58 billion are sales within the EU and €40 billion are sales everywhere else. The figures indeed reflect the critical role social media plays in driving sales for businesses across Europe. 

“This is particularly true for small- and medium-sized businesses, who not only use social media to showcase their company and their products, but also as a trusted forum for communication with customers, a tool for analytics and insights and a source of cost-effective advertising, enabling them to reach new customers locally and abroad,” the social media giant added.

A London financial newspaper CityAM reached out to Meta as well as the company’s illustrious VP of Global Affairs Nick Clegg, connecting the plight of a billion-dollar international conglomerate with struggles small businesses could face.

“A lack of safe, secure, and legal international data transfers would damage the economy and hamper the growth of data-driven businesses in the EU, just as we seek a recovery from Covid-19. The impact would be felt by businesses large and small, across multiple sectors,” Clegg said.

He summed it up by saying “While policymakers are working towards a sustainable, long-term solution, we urge regulators to adopt a proportionate and pragmatic approach to minimize disruption to the many thousands of businesses who, like Facebook, have been relying on these mechanisms in good faith to transfer data in a safe and secure way.”