Update, Feb 9 (6:15 p.m. ET): Meta doesn't plan to leave Europe
What you need to know
- Meta has warned in an SEC filing that it could pull Facebook and Instagram from Europe if it isn't allowed to transfer user data from the European Union to the U.S.
- A ruling by the EU Court of Justice in July 2020 voided the U.S. Privacy Shield, which allowed American companies like Meta to collect and transfer data of EU subjects.
- Meta says the new limitations on transatlantic data transfers would have an adverse effect on its advertising business.
Meta has "warned" in its 2021 annual report submitted with the Securities and Exchange Commission that it may not be able to continue offering Facebook and Instagram in Europe if it can no longer move data of its users from Europe to the U.S. (via Bloomberg).
Until July 2020, Facebook and other American tech giants like Google could transfer the data of EU subjects to U.S. servers under the EU-U.S. Privacy Shield. However, the U.S. law was invalidated by the EU's Court of Justice, which claimed that it didn't provide adequate safeguards to EU subjects.
Additionally, other legal frameworks that Meta relies upon to move data between its European and U.S. servers, such as the Standard Contractual Clauses (SCCs), have also been subjected to regulatory scrutiny. A draft decision by the Irish Data Protection Commission in August 2020 concluded that the social networking giant's reliance on SCCs to transfer data of European users is not in compliance with the General Data Protection Regulation (GDPR).
It also proposed that such transfers of user data from the European Union to the U.S. be suspended. A final decision on the matter is expected to arrive sometime in the first half of 2022.
Meta says if a new transatlantic data transfer isn't adopted or if it cannot rely on SCCs or other alternative means of data transfers from the EU to the U.S., its advertising business would be "adversely affected."
It remains to be seen if Meta's "threat" will force European regulators to change their stance on SCCs, but the tech giant may not actually stop offering its services in the old continent. Earlier this month, Facebook reported a dip in its daily active users for the very first time. While the service had 1.93 billion daily active users in Q3 2021, the number dropped to 1.929 billion in the fourth quarter.
Update, Feb 9 (6:15 p.m. ET) ― Meta clarifies its stance
Following reports that it was threatening to leave Europe, Meta explained this week that this was not the case and that the company was pointing out the risks posed by the European Union invalidating Privacy Shield.
"We have absolutely no desire to withdraw from Europe; of course we don't," Meta stated in a blog post. "But the simple reality is that Meta, like many other businesses, organisations and services, relies on data transfers between the EU and the US in order to operate our global services."
"We're not alone. At least 70 other companies across a wide range of industries, including ten European businesses, have also raised the risks around data transfers in their earnings filings."
Meta says that it continues to monitor the potential impact to millions of people that may be caused by the friction between the United States and European Union privacy protection laws.
