Meta is threatening to 'shut down' Facebook in Europe — here's why
Meta's ability to serve targeted ads to users in Europe could be "severely limited" by European data regulations.
- 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.
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.