Tech giant warned that regulatory scrutiny over data transfers affects its targeted ads
Meta is considering shutting down Facebook and Instagram in Europe if the tech giant can’t process, store and transfer data from European users on its US-based servers.
As Meta’s Securities and Exchange Commission stated in its annual report, there is a scenario in which the social media giant might have to entirely stop operating Instagram and Facebook in Europe, due to transatlantic data transfers.
According to the report, this data transfers between countries and regions are vital for the provision of Meta’s services. So far, Meta has used the Privacy Shield, a transatlantic data framework, as the legal basis for its data transmission.
However, this legal framework was annulled by the European Court of Justice in July 2020 due to data protection violations. Since then, the EU and the US have been working on a new or updated version of the framework.
“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,” Meta reported.
As the company clarifies, Mark Zuckerberg and his team are optimistic that they will be able to reach new agreements in 2022 and cope with the issue of transferring and storing data on their servers from European users.
However, Meta stressed that if the current model agreements won’t change soon, “we will likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe”.
“Substantially all of our revenue is currently generated from third parties advertising on Facebook and Instagram,” Meta reported and noted that it relied on data signals from user activity to deliver relevant advertisements to Facebook and Instagram users. As the company added, the EU’s General Data Protection Regulation (GDPR) has impacted its ability to use such signals in its ad products.
Among others, the key issue for Mark Zuckerberg’s company is that the current model agreements to enable transatlantic data transfers are under heavy scrutiny in the EU. Back in August 2020, Irish Data Protection Commission (IDPC) concluded that the standard agreements used by Meta were not in line with the GDPR. The Commission suggested Meta stop transferring and storing data from the European users on its US-based servers. However, this was only a preliminary conclusion, and therefore no change occurred. Based on the European regulations, users’ data can only be transferred to a country outside the EU if that country provides sufficient protection to users’ sensitive information.
According to Meta, following the GDPR’s adoption an increasing number of users have chosen to “control certain types of targeting ads in Europe,” and as Meta expects this new trend is about to “increase further with expanded control over certain third-party data”.
The upcoming months will be crucial for the future of both Facebook and Instagram in Europe, which will depend on the model for the transfer of personal data outside the EU that is finally adopted.