If the EU and US fail to reach an agreement on the exchange of data between European and American companies and organisations, Meta sees only one way out. The parent company of Facebook and Instagram can then no longer offer these services on the European mainland. And Meta isn’t the only one who thinks so.
Meta presents quarterly figures, share price ends up in free fall
On Wednesday, Meta presented the quarterly figures for the last three months of last year. At first glance, the numbers looked rosy: turnover rose to more than 33.6 billion dollars, an increase of almost 20 per cent compared to the same period a year earlier. The forecast for the first three months of 2022 also looks good: Meta expects to achieve between $27 and 29 billion in revenue, an increase of 3 to 11 per cent from the first quarter of 2021.
Despite the positive results, investors were not pleased. They had expected higher numbers. In addition, they saw that the number of active daily users had fallen from 1.93 billion to 1.929 billion. The difference is only one million users. It was the first time since Facebook was founded that the number of active users decreased. And that did not sit well with shareholders.
After the fair, the price of Meta plummeted by 25 per cent. In less than a day, the tech company lost $230 billion of its value. CEO Mark Zuckerberg lost $29 billion of his assets as a result of this price fall.
Are Facebook and Instagram disappearing from Europe?
As all major US companies are required to, Meta published an explanation of the quarterly figures. A document that the average investor does not bother to read. Politico journalist Mark Scott did.
As he read that piece, he saw a remarkable statement pass by. “Unless a new transatlantic data transfer framework is adopted and we cannot continue to rely on model contracts or other alternative means of transferring data from Europe to the United States, we may no longer be able to provide some of our core products and services. , including Facebook and Instagram, in Europe.”
Negotiations on successor Privacy Shield
The above comment is a reference to a ruling by the European Court of Justice from the summer of 2020. The judge cancelled the Privacy Shield, an agreement between the EU and the US that regulated the exchange of data between companies. The framework was in violation of the General Data Protection Regulation (GDPR) and therefore not legally valid. The GDPR demands that companies on the other side of the Atlantic adopt similar storage and security measures as here in Europe. According to the Court, that was not the case.
The EU and US have been negotiating for more than a year and a half about a successor to the Privacy Shield. And it is expected that it will take some time before it is available. Until then, companies must record their agreements in model contracts, also known as Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCR). Many European companies forego that. That is why the Austrian privacy activist Max Schrems has submitted more than a hundred complaints to the Dutch Data Protection Authority and other national supervisory authorities.
Clear and international rules of the game
Whether Meta will actually take services such as Facebook and Instagram out of Europe remains to be seen. After all, the soup is not eaten as hot when it is served. A spokesperson for Meta tells RTL Nieuws that the American company wants to prevent this. “We have absolutely no desire and no plans to withdraw from Europe.”
“But the simple reality is that Meta, and many other companies, organizations and services, depend on data transfers between the EU and the US to provide global services. Like other companies, we have followed European rules and rely on standard contractual clauses and appropriate data safeguards to provide a global service,” the spokesperson continued.
According to him, clear and internationally applicable rules for exchanging data is the only solution. He emphasizes that “more than 70 other companies” have the same concerns as Meta, both in the EU and the US.
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