According to parent company Meta, Facebook and Instagram may be shut down across Europe.
The problem stems from European data restrictions that ban Meta, formerly known as Facebook, from transporting, storing and processing Europeans’ data on servers in the United States
Meta warned last Thursday in its annual report to the US Securities and Exchange Commission, the country’s financial regulator, that if no new framework is adopted and the firm can no longer use the current model of agreements, it will be forced to leave the continent.
Previously, Meta could have used the Privacy Shield data transfer framework as the legal basis for transatlantic data transfers. But The European Court of Justice declared the pact null and void in July 2020, citing data protection concerns. The criterion, according to the EU’s highest legal authority, does not effectively protect European residents’ privacy. As a result, US corporations have been limited in their ability to transport European customer data to the US, compelling them to rely on SCCs (standard contractual clauses). If a new EU regulation restricting their use of Europeans’ data is enacted, the social media corporation has warned that it may withdraw from countries in the European Union, which does not include Britain after Brexit.
The ad business, which generates nearly all of the company’s billions in income, relies heavily on data, and regulations that have regulated the migration of data from the continent are now in jeopardy. In July 2020, a top EU court judgment nullified the vital ‘Privacy Shield’ online data agreement between Europe and the United States, putting transatlantic big tech in legal limbo. Current EU restrictions, Meta claimed in its annual report to the US Securities and Exchange Commission, are blocking data transfer, which it claims is necessary for its operations. European regulators are currently working on new legislation that will govern how users’ data is transmitted to the United States, but they and the US government are still discussing options. After poor quarterly results that sparked worries about the company’s future, the social media behemoth just witnessed its worst-ever drop in market value. After unexpectedly high spending on its Metaverse virtual reality project resulted to a rare decline in its fourth quarter profit, the company’s value was wiped off by up to $200 billion.
During the fourth quarter of 2021, the firm put a lot of money into its Reality Labs segment, which comprises virtual reality headsets and augmented reality technology, which accounted for a lot of the profit decline. Meta’s Reality Labs branch is in charge of realising CEO Mark Zuckerberg’s Metaverse vision. Instead of watching it on a screen, the CEO describes it as a “virtual habitat” that you may enter. It would theoretically be a place where people could connect, collaborate, and play utilising virtual reality headsets, augmented reality glasses, smartphone apps, and other gadgets.
It’s not the first time Facebook has clashed with authorities and nations about how it’s governed.
Because it objected to a rule requiring publishers to pay for content, the social media network prohibited users in Australia from sharing news stories for many days in 2021.
After negotiations with the Australian government resulted in changes to the law, it restarted news stories.