Meta May Shut Down Facebook and Instagram in Europe

Is it possible that Facebook and Instagram will be blocked in Europe?

Various reports surfaced over the weekend claiming that Facebook's parent company, Meta, is contemplating whether to shut down its services in the EU owing to a continuing legal battle as to how it manages EU user data.

The reports followed Meta's most recent SEC update, which included the following note:

“In August 2020, we received a preliminary draft decision from the Irish Data Protection Commission (IDPC) that preliminarily concluded that Meta Platforms Ireland's reliance on Standard Contractual Clauses (SCCs) in respect of European user data does not achieve compliance with the General Data Protection Regulation (GDPR) and preliminarily proposed that such transfers of user data from the European Union to the United States should therefore be suspended. We believe a final decision in this inquiry may issue as early as the first half of 2022. If a new transatlantic data transfer framework is not adopted and we are unable to continue to rely on SCCs 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, which would materially and adversely affect our business, financial condition, and results of operations.”

Meta points out that in the year 2020, a European Union privacy regulator issued a preliminary ruling prohibiting the company from sending data about its EU users to the US. The directive was issued in response to growing worries among EU officials about possible US government spying techniques.

The nature of the perceived threat, in this case, was not disclosed, but the decision came shortly after the Trump Administration attempted to ban several Chinese-developed apps from the United States, including TikTok, over worries that they can be used to provide China's ruling Communist Party with information on US citizens.

The effort was unsuccessful, and TikTok, and several other Chinese apps, keep operating in the United States. However, the TikTok case has raised additional worries about the safety of foreign countries tracking residents through social media applications, as well as the possibility for such data to be exploited by regional entities if they so choose.

Considering their cooperation on most fronts, there appear to be little grounds for apprehension on this front between the US and EU nations. Still, it's a constant concern, and Meta notes that a formal judgment on the matter might come in the next few months, theoretically forcing Meta to rethink how it handles user data. As a result, Facebook and Instagram may be removed from the region.

That would be a major move, and it appears to be more of a show at this point than something Meta will execute. However, because of a disagreement about revenue split, Meta stopped letting all Australian news publishers to its platforms in February of last year, demonstrating that it is prepared to take drastic measures in certain situations, especially if it's necessary to do so.

Meta may still be able to get an agreement on user data transfers, allowing it to continue processing EU user data in its US data centers. Alternatively, it may be obliged to keep everything contained within the area. It's worth noting that Meta already has data centers in Ireland, Sweden, and Denmark, and had recently applied to construct another one in the Netherlands.

Hence, it's not impossible that Meta could, if necessary, comply with any such constraints. It would be a huge task, and it could restrict user data analysis at a period when Meta is already experiencing capacity issues as a result of Apple's iOS 14 release. Another possible benefit for EU countries might be in terms of tax duties and guaranteeing that Meta pays its part in each region.

If Meta is compelled to operate entirely in each country, with completely localized offices and data processing, it may be limited in its ability to focus on low-tax countries to develop regional bases. It's still a future consideration and not the main point of the proposal, but the idea is that those rules secure data sovereignty in each region that can also apply to other aspects of governance.

Nevertheless, it's doubtful that the complete shutdown of Facebook and Instagram in the EU would occur. In the EU, Facebook has 427 million users and was the only region to see a considerable increase (+4 million MAU) in the latest quarter, and that doesn't even include Instagram.

Is Meta willing to completely break off that many users? Perhaps they'd have to wear out all options before that occurs, and we're not there yet because the judgment hasn't been formalized as of now.