Data privacy rules: Why Meta is struggling in Europe
Meta launched Threads last week. More than 100 million users have joined in less than five days. Amid the fanfare surrounding Threads, one thing stood out-Meta did not launch the Twitter challenger in the EU. Meta attributed this to "regulatory uncertainty." Threads's no-show is one of the multiple issues the company is facing in the region. Let's see why Meta is struggling in Europe.
Why does this story matter?
Europe has become a nightmare for tech giants in the past few months. The bloc's strict stance on how companies handle the personal data of EU users has made it hard for companies like Meta to function in Europe. In May this year, Meta was fined $1.3 billion for violating EU's privacy rules. Things are only going to get harder in the coming months.
Meta cannot launch Threads in its current form in EU
Threads has been criticized by many, including Elon Musk and Jack Dorsey, for being data-hungry. Like its cousins Facebook and Instagram, the app seeks to harvest as much data as possible. Meta knows it will face immense scrutiny from EU regulators if it launches the app in its current form. That's why the company said it's awaiting more certainty.
The company is fearful of Europe's Digital Markets Act
No, Meta is not concerned about the General Data Protection Regulation (GDPR), Europe's privacy regime. Instead, it is fearful of the Digital Markets Act (DMA). The DMA is antitrust law that aims to level the playing field. However, it contains rules that can severely affect the business model of companies like Meta. Meta is still unclear on how to follow that law.
DMA affects data collection by tech companies
Advertising is Meta's chief source of revenue. The DMA is a threat to how Meta collects data for targeted advertising. The law prohibits 'gatekeepers'—the companies that have a strong economic position and provide core platform services (CPS) to over 45 million EU users—from combining personal data from CPS with data collected through other services (theirs or third party's).
Meta will need users' consent to combine data
Meta combines data collected from different services for its advertising operations. With DMA in force, it won't be able to do that. It will need users' explicit consent before it combines their personal data. We have seen how Apple's data tracking restrictions affected Meta's revenue last year. A similar fate is awaiting the company in Europe too.
Europe's top court dealt a blow to Meta
The company has no other way but to comply with DMA. The Court of Justice of the European Union recently ruled against Meta in its fight against a German data curb. The court allowed antitrust regulators to address data protection concerns. The German competition watchdog had banned Meta from mixing data collected from Facebook with data harvested from its other platforms.
Meta will need to give users a meaningful choice
Meta is at crossroads now. It will need to give European users a meaningful choice before harvesting their personal data and combining it with data from other platforms. At the moment, it signals an end to Meta's current business model. That is why we are yet to see Threads in the EU. We will see how Meta deals with this crisis sooner than later.
