Facebook’s parent company, Meta, is threatening to withdraw social networks Facebook and Instagram from the European Union (EU) if regulators do not allow them to process personal user data in both Europe and the US.
According to Android Police, Meta mentioned this in a recent report to the US Securities and Exchange Commission. In the report, Meta stated that it is vital for businesses to process data both in the EU and the US to make their ad-targeting business work better.
“If we are unable to transfer data between the countries and regions in which we operate, or if we are restricted from sharing data between our products and services, that may affect our ability to our ability to deliver our services, the way we deliver our services, or our ability to target ads,” Meta stated.
The problem is that EU law requires that citizens’ data be processed only on servers located in Europe. This means that the data-sharing agreement between the US and the EU is no longer relevant, and there are no new regulations to suggest it is legal.
Meta hopes to strike a new deal by 2022, but if that fails, the company warns of a dire future for its social networks in the EU. Specifically, it won’t be able to offer some of its most important products and services, including Facebook and Instagram, in Europe. This has a material and adverse effect on the business, financial condition, and results of operations of the company.
Interestingly, Meta does not mention the encrypted messaging service WhatsApp – which is one of the messaging applications used in many EU countries. Given WhatsApp’s encrypted nature and lack of advertising in the service, it’s possible that separating Europe and America data won’t make much of an impact on the company’s bottom line.
At the moment it is still uncertain whether Meta will weather the difficulties in the EU as this is one of the lucrative markets for the company. Losing such a large market is really bad news, especially given that Meta just lost 25% of its market value following its fourth-quarter 2021 earnings report. Of course, it cannot be excluded that Meta just wants to make a threat to force the EU to review the regulations related to data sharing for servers located outside this region.