Meta Warns It May Close Social Media Services In Europe Due To Data-Sharing Regulations

Amid negotiations with European authorities to replace a cancelled privacy pact, Meta Platforms Inc. has threatened to pull Facebook and Instagram from Europe if it is unable to continue transmitting user data back to the United States.

Thousands of organisations rely on a transatlantic data transfer agreement that was ruled down by the EU Court of Justice in 2020 amid concerns that citizens' data isn't protected after it's delivered to the United States, but European Union officials have been mired in negotiations with the US for months.

However, European regulators are already drafting new rules that will govern how EU residents' personal information is transmitted across the Atlantic.

Meanwhile, the social media behemoth issued a warning in its annual report, in which it says: “If a new transatlantic data transfer framework is not adopted and we are unable to continue to rely on SCCs (standard contractual clauses) or rely upon other alternative means of data transfers from Europe to the United States, we will likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe, which would materially and adversely affect our business, financial condition, and results of operations.”

Last week, European lawmaker Axel Voss wrote in a tweet regarding this matter, “Meta cannot just blackmail the EU into giving up its data protection standards, leaving the EU would be their loss.”

However, according to Bloomberg, a Meta spokesperson said: “We have absolutely no desire and no plans to withdraw from Europe, but the simple reality is that Meta, and many other businesses, organizations and services, rely on data transfers between the EU and the US in order to operate global services.”

The latest remarks show the growing rift between the social media corporation and lawmakers over user data control.

According to a report from The Wall Street Journal that cited sources, Ireland's Protection Commission sent Facebook a preliminary order in August 2020 to stop transferring user data from the EU to the United States.

At that time, Facebook’s vice-president of global affairs and communications, Nick Clegg wrote in a blog post that the Irish Data Protection Commission had launched an investigation into Facebook-controlled EU-US data transfers, and suggested that SCCs cannot be used for EU-US data transfers in practice.

He also noted: “While this approach is subject to further process, if followed, it could have a far-reaching effect on businesses that rely on SCCs and on the online services many people and businesses rely on.”

According to reports, In the first half of 2022, Ireland's Data Protection Commission is likely to make a final ruling. In this case, if SCCs aren't allowed to be used as a legal basis for data transfers, Facebook will have to separate the majority of the data it collects from European users.

But if Facebook fails to comply, the DPC might fine it up to 4 per cent of its annual revenue, or $2.8 billion.

Additionally, it needs to be noted that the European Court of Justice determined in July 2020 that the EU-US data transfer standard does not effectively protect European citizens' privacy. After that, EU's top judicial authority limited how American firms could send European user data to the United States.

The ECJ decision came after Austrian privacy campaigner Max Schrems filed a case in the wake of whistleblower Edward Snowden's revelations, claiming that American law did not provide adequate protection against eavesdropping by public authorities. Schrems filed a lawsuit against Facebook, which, like many other companies, was sending his and other users' data to the United States.

Regarding the report released by Meta recently, Schrems tweeted saying “…amazing how they don't seem to work on durable solutions”.

However, the EU-US Privacy Shield agreement, which allowed companies to transport EU citizens' data over the Atlantic, was declared invalid by the court. As a result, businesses have been forced to rely on SCCs.

According to the European Commission, data transfer negotiations with the United States have increased. But as per a spokesperson, they “take time given also the complexity of the issues discussed and the need to strike a balance between privacy and national security”.

The spokesperson also noted: “Only an arrangement that is fully compliant with the requirements set by the EU court can deliver the stability and legal certainty stakeholders expect on both sides of the Atlantic.”