Facebook Threatens to Pull Out of EU

After a landmark decision by the European Court of Justice in July found that there were inadequate protections against surveillance by US intelligence agencies, Facebook threatened that it would pull its platform, as well as its subsidiary Instagram, out of Europe if the Irish Data Protection Commissioner enforces a ban on sharing data with the US. If Facebook and Instagram were to pull themselves out of the EU, there would be major changes and consequences for multiple markets globally, not just the EU.

Why?

The EU has always been at the forefront of protecting consumer data and data privacy in general since they passed one of the first and most significant data privacy laws in the world, the General Data Protection Regulation (GDPR). Facebook on the other hand seems to have a different allegation or charge against them in countries all over the world for breaching consumers’ privacy and trust. They just recently pushed for data portability, which conflicts with their own business ideology and intentions because they were attempting to appease U.S. regulators and watchdogs before an anit-trust meeting with Congress. The Irish Data Commissioner and Facebook have been battling for years, to no avail for the Irish Data Commissioner.

How is Facebook Responding?

Yvonne Cunnane, Facebook’s Head of Data Protection and Privacy in Ireland, said in the court filings, “In the event that Facebook were subject to a complete suspension of the transfer of users’ data to the US… it is not clear how, in those circumstances, it could continue to provide the Facebook and Instagram services in the EU.” So they essentially threatened to pull themselves entirely out of the EU because they would not be “operable,” which means not as profitable, really. Even though their Head of Data Privacy and Protection said there would be no possible way for the company to operate in the EU if the Irish Data Commissioners ban sticks, Facebook denied the filing was a threat. In a statement, Facebook said it was a simple reflection of reality: “Facebook is not threatening to withdraw from Europe.” So, are they or aren’t they?

How Will This Affect Other Industries

The eCommerce Market will definitely be impacted by the court’s ruling of whether to uphold the decision or not, due to the rapid growth of the industry from COVID. This year, eMarketer predicts an overall $3.914 trillion in online shopping sales in 2020. PYMNTS and other eCommerce related tracking websites have established that the worldwide retail online shopping sales will be a whopping 16.5 percent growth rate this year. Clearly, eCommerce is on the way up as more and more consumers begin to shop for all their needs online, especially because of the pandemic.

But What Does that Have to do with FB Pulling Out?

Right now there are approximately 387 million active FB users in the EU. That would be a ginormous market of eCommerce customers that could be wiped out. So many consumers buy and purchase products or goods from apps and websites like Facebook and Instagram. Instagram has been so successful with eCommerce engagement that they’ve created their own actual Shop function or feature in the app. That is a large portion of users that FB would not be reaching.

Add that to recent FB Limited Data Usage (LDU) guidelines which have thrown marketers and advertisers in a spin, Facebook could be missing out on not only the entire European Union, but also one of most populated states in California. The problem with FB’s LDU is that they have now dictated how they will handle any personal data being used on their platform, which is by not handling it. Unsurprisingly, Facebook has decided that advertisers on the platform must handle this themselves and remove Facebook from any liability. Imagine the amount of consumers FB would be losing out on by not having any presence in the EU and having really limited data from all California users. 

(If you do happen to have a business that relies upon data based in the US and need help navigating FB’s LDU, click here.)

Right now, it seems highly unlikely that Facebook will quit Europe; however, Facebook has described that they may be incapable of providing a service based on some of the regulations and that is something to keep an eye on.