Meta could SHUT DOWN Facebook and Instagram in Europe if it can’t process EU data on US servers

Meta has threatened to shut down Facebook and Instagram in Europe if it is not able to transfer, store and process EU data on its US-based servers – despite the social media giant making $6.8billion a year on the continent in advertising revenue.

The social media company warned it could walk away from countries in the European Union – which does not include Britain after Brexit – if a new EU law is introduced restricting their use of Europeans’ data . 

Data is central to the ad business that generates nearly all of the company’s billions of dollars in revenue, and frameworks that have overseen the transfer of information from the continent are now in limbo. 

The crucial ‘Privacy Shield’ online data arrangement between Europe and the United States was invalidated in July 2020 in a top EU court decision that threw transatlantic big tech into legal uncertainty. 

In its annual report to the US Securities and Exchange Commission, Meta said current EU regulations are preventing data transfer which it says is essential for its operations. 

European regulators are currently drafting new laws which will decide how users’ data is transferred to the US. – but they and the US government are still talking through ways to resolve the issue.

The social media giant recently saw its worst-ever plunge in market value, after disappointing quarterly results that raised questions about its future. 

Up to $200bn was wiped off the value of the company after unexpectedly heavy spending on its Metaverse virtual reality project led to a rare decline in its fourth quarter profit. 

The company heavily invested in its Reality Labs segment – which includes its virtual reality headsets and augmented reality technology – during the final quarter of 2021, accounting for much of the profit decline.

The Reality Labs segment is Meta’s division tasked with building CEO Mark Zuckerberg’s Metaverse vision.

The CEO has described it as a ‘virtual environment’ you can enter instead of just viewing it on a screen. Theoretically, it would be a place where people can meet, work and play using virtual reality headsets, augmented reality glasses, smartphone apps or other devices.

And it is not the first time that Facebook has tangled with regulators and governments over the way it is regulated. 

In 2021, the social media network banned users in Australia from sharing news articles for several days because it objected to a law designed to force them to pay publishers for content. 

It reactivated news stories after negotiations with the Australian government resulted in tweaks to the law.    

Meta’s share price plunged last week after the company announced a dip in profits 

Meta has threatened to shut down Facebook and Instagram in Europe if it is not able to transfer, store and process data on its US-based servers

Meta said today: ‘We have absolutely no desire and no plans to withdraw from Europe, but the simple reality is that Meta, and many other businesses, organisations and services, rely on data transfers between the EU and the US in order to operate global services.” 

‘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 

‘​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, the manner in which we provide our services or our ability to target ads.’ 

They added any changes would ‘would materially and adversely affect our business, financial condition, and results of operations’.

Meta’s data had been regulated via a data transfer framework known as the Privacy Shield and other model agreements.

But this treaty was annulled by the European Court of Justice in July 2020 because of violations of data protection. 

Current agreements allow data to be transferred but the arrangement is under heavy scrutiny, which could threaten Mark Zuckerberg’s current business model

Since then, the EU and the US have tried to work on a new version but it is yet to be implemented. 

Meta has been relying on standard contractual clauses to transfer the data. 

Meta said in its report it hopes to reach an agreement with the EU this year.

Nick Clegg, Meta’s VP of Global Affairs and Communications, said in a statement: ‘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. 

‘While policymakers are working towards a sustainable, long-term solution, we urge regulators to adopt a proportionate and pragmatic approach to minimise 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.’

In August 2020, Ireland’s Protection Commission ordered Facebook to stop transferring data to the US.

A final decision is expected in the first half of this year.

If standard contractual clauses cannot be used, Facebook would have to get rid of the majority of the data it holds on its European users.

The company could even faces fines of up to $2.8billion if it fails to comply.