Amid the ongoing scrutiny from various regulatory bodies and lawmakers around the globe, Big Tech has some leverage.
It can simply take its ball and go home, so to speak.
The latest evidence here is that, in the midst of an ongoing joust with regulators over data privacy in Europe, Meta might shutter Facebook and Instagram in the region.
In its annual filing with the Securities and Exchange Commission (SEC), the company said in its risk factor discussion that “if we are unable to transfer data between and among countries and regions in which we operate, or if we are restricted from sharing data among our products and services, it could affect our ability to provide our services,” and negatively impact financial results.
Specifically, the company said, the Privacy Shield, a transfer framework the company has relied upon for data transferred from the European Union to the United States, was invalidated in July 2020 by the Court of Justice of the European Union (CJEU). In addition, the sequent month, in August 2020, the Irish Data Protection Commission (IDPC) handed down a preliminary decision that Ireland’s reliance on standard contractual clauses (SCCs) is not in compliance with the General Data Protection Regulation (GDPR) — and that data transfers between the EU and the U.S. should be suspended.
Looking for Clarity
A final decision on the matter — Meta Platforms Ireland had challenged the inquiry — is expected during the first half of this year.
If there’s not a new framework in the offing, Meta said it might be “unable” to continue to offer Facebook and Instagram in Europe.
The same filing noted that Meta garnered $8.3 billion in revenues in the most recent quarter, out of $33.7 billion in total top line for the period. So, we can see that Europe represents a significant slice of the revenue pie.
The dance seems a delicate one. In the event that the contractual agreements would not be used to put guardrails around data flow, and an alternate framework were not applied, the company might have to effectively stop collecting or transferring that Europe-centric data. If it failed to keep that data in place, the company might face fines of roughly 4% of its annual top line.
Before Meta’s latest quarterly report, it received a letter from the European Commission, this time addressed to WhatsApp, to question how it processes personal data and whether it meets EU consumer protection requirements.
In a sign of what’s to come, and the battle ahead that might be waged in Europe, Axel Voss, member of the European Parliament, said on Twitter, “I have always called for an alternative to the EU U.S. privacy shield to find a balanced agreement on data exchange and always called for GDPR flexibility. However, Meta cannot just blackmail the EU into giving up its data protection standards … leaving the EU would be their loss.”
I have always called for an alternative to the EU US #privacyshield to find a balanced agreement on data exchange + always called for #GDPR flexibility. However, #META cannot just blackmail the EU into giving up its data protection standards, leaving the EU would be their loss.
— Axel Voss MdEP (@AxelVossMdEP) February 7, 2022
The question remains for Meta, echoing that old tune: Should they stay, or should they go? The answer will come sooner rather than later.