What Now for Facebook and Meta after historic fall
The parent company of Facebook and Instagram has warned to be shutting down operations in Europe over data regulations issue that prevents from storing, transferring and processing of data on US-based servers. Addressing the US Securities and Exchange Commission on Thursday, Meta said if the European Union fails to adopt a new framework, the company needs to walk away from the region.
The company said providing services in the manner as it is today won't be possible if the transfer of data between and among regions and countries is restricted.
It clarified that Meta may conclude with a new agreement this year and has no plans to pull its products and services from Europe, but if things do not implement it would be impossible to offer Facebook and Instagram in the continent further.
It is a simple reality that organizations, businesses and services rely on data transfers between regions and countries to operate global services, said a spokesperson of the company in a statement to news media on Monday.
Meta stated that the company complies with the European rules and simultaneously relied on the Standard Contractual Clauses as well as the safeguarding norms of data to operate a global service.
Meta was to use the legal Privacy Shield data transfer framework to protect transatlantic data flows, but the treaty was annulled by the European Court of Justice in July 2020 due to data protection violations arguing the standard fails to protect the privacy of European citizens adequately.
This stopped the US companies from sending data to the US servers and they had to rely on the standard contractual clauses (SCCs). However, it is being said a new version of the treaty is being worked upon.
European Commission Reaction
According to a European Commission spokesperson, safe transatlantic data transfers are the priority for both the EU and US.
In recent months the negotiations have intensified at the technical as well as political level. The negotiations may take some time due to the complexity of the issues. There have been regular contacts between Commissioner Reynders and his counterpart.
The spokesperson further added that a fully compliant arrangement with the EU court requirement can deliver stability on both sides.
Meanwhile, billionaire venture capitalist Peter Thiel is stepping down from the Meta board and he is learned to be focusing on aiding the Republican candidates in the midterm elections. Shares of the company dipped five percent on Monday.
The shares lost about 25 percent value in the previous week following the social giant lost daily active users for the first time.