In its annual report on Feb. 2nd Meta (formerly Facebook) threatened to pull Facebook and Instagram from EU users. This comes as EU regulators are working on new legislation that would prevent Meta from transferring, storing and processing the data of Europeans on servers that are based in the U.S.
Pulling Facebook and Instagram from EU Users
The problem with the EU legislation, according to Meta, is it would greatly limit or restrict the company from sharing data with its products and services. And in turn this could affect how Meta provides its services as well as its ability to target ads.
Considering Facebook and Instagram rely on ads for their revenue, having the services in the EU would not be profitable if the legislation passes.
Prior to this U.S. based companies could use Privacy Shield, a data transfer framework for transatlantic data transfer. However, in 2020 the treaty was annulled by the European Court of Justice because of data protection violations. This restricted U.S. companies from sending the data of European users to the U.S. In the meantime, they have been using Standard Contractual Clauses (SCCs) as a workaround.
The U.S. and EU are currently working on the treaty to accommodate the grievances of companies such as Meta and others. However, companies that don’t achieve compliance with the General Data Protection Regulation (GDPR) will continue to get warnings, fines, and even bans. But this doesn’t only apply to large enterprises. Small businesses that have their site being accessed from the EU and by EU customers also have to abide by the regulation.
General Data Protection Regulation (GDPR) and Small Businesses
As a small business, are you compliant with GDPR? If you have a website and/or digital commerce as part of your operation, you have to make sure you are compliant.
According to the GDPR EU site, “The GDPR not only applies to organizations located within the EU but it will also apply to organizations located outside of the EU if they offer goods or services to, or monitor the behavior of, EU data subjects. It applies to all companies processing and holding the personal data of data subjects residing in the European Union, regardless of the company’s location.”
The EU has fines with a tiered approach, so not everyone is fined the same way. However, noncompliance will result in a fine of up to 4 percent of annual global turnover or €20 million or $23.9 million. So, make sure you are compliant if you have EU customers.
Facebook and Instagram Out of the EU
With millions of individuals and businesses using both platforms, cutting Facebook and Instagram off will have a noticeable impact on EU citizens.
Conversely, the impact on Meta will also be huge. In addition to Facebook and Instagram, WhatsApp will most likely be cut off also. And this could cost Meta 25% of its revenue. When you consider Meta just lost $230 billion after the stock fell 26%, the company can ill afford to do without the revenue the EU provides.
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