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Meta Platforms said it expects a final decision on the data transfer in the first half of this year.
Technology platform Meta Platforms (NASDAQ: FB) is considering shutting down its subsidiaries Facebook and Instagram in Europe. The technology company mentioned the data-sharing dispute as a challenge that may stop its services to its European consumers. In its annual report, Meta broke down its data-sharing challenges since 2020. The company said that the Court of Justice of the European Union (CJEU) invalidated its transfer framework, the Privacy Shield, in July 2020.
Meta used to rely on the framework for data transferred from the EU to the US. Also, the other method of data sharing from the EU to the US Meta depends on, like Standard Contractual Clauses (SCCs), is under regulatory and judicial scrutiny. Meta said the Irish Data Protection Commission (IDPC) sent a preliminary draft decision, stating that Meta Platforms Ireland’s reliance on SCC’s regarding European users is not compliant with the General Data Protection Regulation. Therefore, the draft orders the suspension of all data sharing from Europe to the US for Meta.
Facebook VP of Global Affairs and Communications Nick Clegg earlier discussed the investigation by the Irish Data Protection Commission. Clegg said in a blog post that Commission had begun an inquiry into the company over EU-US data transfers. At the time, the executive noted that the process could affect the company negatively. Clegg noted:
“While this approach is subject to further process, if followed, it could have a far reaching effect on businesses that rely on SCCs and on the online services many people and businesses rely on.”
Meta Struggles with Data-Sharing Regulation in Europe
Speaking further in the report, Meta Platforms said it expects a final decision on the data transfer in the first half of this year. The company states:
“If a new transatlantic data transfer framework is not adopted and we are unable to continue to rely on SCCs or rely upon other alternative means of data transfers from Europe to the United States, we will likely be unable to offer a number of our significant products and services, including Facebook and Instagram, in Europe, which would materially and adversely faucet our business, financial condition, and results of operations.”
In addition, the company said it expects to continue to be a subject of investigation and data requests. It also expects the US and European governments to continue regulating its structure. Meta said it is currently and may be subject to regulatory orders or consent decrees in the future.
A European lawmaker Axel Voss commented on the data-sharing challenge Meta is facing with regulators. Voss said that “Meta cannot just blackmail the EU into giving up its data protection standards.”
The lawmaker added that the company would be at the losing end if its leaves Europe.
Meta Platforms stock is currently down 0.95% to $222.77 in after-hours trading.