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Meta’s European mess (Bloomberg)

12 February 2022


Bloomberg title: Meta’s European mess
By: Naomi Nix
Date: 10 February 2022

“Meta Platforms Inc. has waded into another political fight. The social media giant said in its annual report last week that it may break up with Europe if regulators there don’t come up with a fix for the legal ambiguity over transatlantic data transfers. Some of those political leaders responded by arguing they’d be better off without Facebook and Instagram anyway.

Like many relationship stalemates, this particular one isn’t likely to end with the dissolution of the union. But the incident does reveal the extent of Meta’s precarious political position outside the U.S. and why that can damage more than just Chief Executive Officer Mark Zuckerberg’s coffers.

First, a little background: After Edward Snowden exposed just how much spying the U.S. National Security Agency was doing overseas, the Obama administration and European leaders were forced to strike a new transatlantic data transfer pact—enshrining the digital privacy rights of European citizens. When a court struck that pact down in 2020 over concerns that Europeans’ data still wasn’t safe on U.S. soil, it threatened not just Facebook but most businesses that transport digital information across borders. 

Now, U.S. and E.U. regulators have for months been trying to negotiate a new agreement for data flows across the Atlantic. 

Meta believes a lot is riding on the deal. The company said in its annual report that if it can no longer rely on its standard contract clauses, or the European Union and the United States don’t come up with a new agreement, then it may have to pull Facebook and Instagram from Europe.

After a deluge of news about possibility of a pullout, Meta responded to the news cycle with a new statement titled “Meta Is Absolutely Not Threatening to Leave Europe.” It argues that the company was merely reiterating required disclosures to investors about the the uncertainty its business faces in the region.

Meanwhile, German Economy Minister Robert Habeck and French Finance Minister Bruno Le Maire said that they thought that a Europe without social media might not be so bad. “I can confirm that life is very good without Facebook and that we would live very well without Facebook,” Le Maire said. 

But whether Europeans can post to Instagram isn’t the only issue at stake. Aaron Cooper, vice president of global policy for BSA|The Software Alliance, said the ability to transfer data between nations is important to all sorts of companies for all sorts of reasons. “If you’re an airline, or a bank, or a health-care company, or a manufacturer or a retailer, you are transferring data back and forth between different countries,” he said. “Anything involving cloud computing, you’re probably transferring data back and forth.” Cooper’s group represents software businesses including Microsoft Corp., Oracle Corp. and Amazon Web Services—but not Meta.

Cooper didn’t say this, but his job—advocating for a legislative fix for transatlantic data transfers—might be much easier if Facebook weren’t involved at all. As this week’s news cycle illustrated, the company just doesn’t have the political goodwill it needs to negotiate the tricky tech policy challenges cropping up around the world. And the more Facebook becomes the message bearer about the importance of cross-border data flows, the more politically fraught the issue will become.

The EU may eventually find a way to keep its digital borders open—but it won’t be because its citizens are worried about being kicked off Facebook.”

Note by LO:
The text above is a copy from a Bloomberg Technology newsletter of 10 February 2022.



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