Mark Zuckerberg’s company Meta revealed in its annual report to the Securities and Exchange Commission (SEC) that it might have to shut Facebook and Instagram in Europe due to data regulations.
According to the reports, Meta has stated that if the company is no longer permitted to transfer, store and process the data from European users, then they eventually have to shut Instagram and Facebook.
Moreover, they also stated that the restriction from sharing data to U.S servers could affect their ability to provide services to their customers, such as targeted ads.
Recently, meta has suffered enormous losses for the first time in its history in a single day. Its market capital plunged by more than $230 billion, and its stock plummeted by 26% over reports of a decline in users throughout the world.
The European data regulations prevent companies from transferring data generated in Europe to U.S servers. Meta usually makes around 98% of its revenue from advertisements. These strict rules can limit its ability to target ads.
Nick Clegg, Meta’s VP of global affairs, said that we urge the regulator to bring a proportionate and pragmatic approach to minimise the disruptions for many businesses who like Facebook.
Even last month, European lawmakers voted to toughen upcoming legislation for tech firms to restrict how they target ads to users.
What do data regulations say in Europe?
In 2016, the EU and U.S. had agreed to transfer data from the European servers to the U.S servers, called the Privacy Shield. But in 2020, it was invalidated by the court of justice of the European Union (CJEU), which said that the Privacy Shield in the U.S has the right to collect personal data of the European residents without any adequate safeguards.
Moreover, Judgement Schrems II affects almost every American company, whose cloud services plays a vital role in the modern usage of the internet.