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On Mon., Meta received a record-breaking fine of 1.2b euros ($1.3b) & was instructed to halt the transfer of data obtained from Facebook users in Europe to the US, The New York Times reports. This landmark ruling against the social media giant stems from its breach of EU data protection regulations.
The penalty, announced by Ireland’s Data Protection Commission, carries significant weight as one of the most significant consequences to date since the implementation of the General Data Protection Regulation (GDPR) 5 years ago.
Non-Compliance
Regulatory authorities highlighted Meta’s non-compliance with a 2020 verdict from the highest court of the EU, which said that data transferred across the Atlantic lacked adequate protection against surveillance activities conducted by US intelligence agencies.
The verdict announced on Mon. specifically targets Facebook & does not encompass other social media platforms under Meta’s ownership, such as Instagram and WhatsApp.
Meta has expressed its intention to challenge the ruling through the appeals process, emphasising that there will be no immediate disruption to Facebook’s operations within the EU.
Data Types
Before the implementation of data partitioning for Facebook users in Europe, several steps need to be undertaken. This includes the segregation of various data types, ranging from photos & friend connections to direct messages & information used for targeted advertising.
Meta has been granted a 5-month period to achieve compliance, & the initiation of an appeal is expected to trigger a lengthy legal procedure.
Negotiations Underway
Efforts are underway between EU & US officials to negotiate a new data-sharing agreement. The proposed pact aims to provide Meta with updated legal safeguards, ensuring the continued transfer of user data between the US & Europe. A preliminary agreement was announced in the previous year.
The EU’s recent ruling serves as a record to the evolving landscape of data regulations, which are increasingly impacting the once seamless cross-border flow of information.
Companies now face increasing pressure to maintain data within the country where it is collected, driven by data protection laws, national security measures, & other regulatory frameworks.
Freely Traverse
Previously, data could freely traverse global data centres without significant impediments.
Meta’s charges stem from official US policies that grant authorisation for the interception of foreign communications, including electronic mail. In 2020, Max Schrems, an Austrian privacy activist, successfully challenged the validity of the Privacy Shield agreement between the US & European Union, prohibiting the transfer of data between the 2 regions for corporations such as Facebook.
European Court of Justice (ECJ)
The European Court of Justice (ECJ) ruled that the potential surveillance of European citizens by US entities was ‘unconstitutional,’ leading to the invalidation of the agreement.
In response to the recent ruling, Max Schrems issued a statement on Mon. stating that unless US surveillance laws undergo significant reforms, Meta will need to undertake substantial restructuring of its systems. According to Mr. Schrems, a potential solution lies in the adoption of a “federated social network” model.
Framework
Under this framework, the majority of personal data would remain within the EU, with only “necessary” transfers taking place, such as when a European user sends a direct message to someone in the US. This approach aims to strike a balance between data protection and essential data exchanges across borders.
Meta, in response to the Mon. ruling, expressed its belief that it was being unfairly targeted for data-sharing practices that are commonly employed by numerous companies.
Joint Statement
In a joint statement, Nick Clegg, Meta’s President of Global Affairs (& former UK Deputy PM), & Jennifer Newstead, the Chief Legal Officer, gave their perspective on the issue:
“Without the ability to transfer data across borders, the internet risks being carved up into national & regional silos, restricting the global economy & leaving citizens in different countries unable to access many of the shared services we have come to rely on.”
Record Fine
The ruling, which stands as a record fine under the General Data Protection Regulation (GDPR), was widely anticipated. Meta’s Chief Financial Officer, Susan Li, had previously informed investors that approximately 10% of the company’s global advertising revenue was derived from ads targeted at Facebook users in European Union (EU) countries.
In 2022, Meta reported revenue of nearly $117b.
Meta, along with other companies, is pinning its hopes on a new data agreement between the US & European Union, aimed at replacing the invalidated agreement of 2020.
Last year, President Biden & Ursula von der Leyen, the President of the European Union, outlined the framework of a deal in Brussels; however, the specific details are still being negotiated.
5th Anniversary
The ruling against Meta comes on the eve of the 5th anniversary of the GDPR. Despite being hailed as a leading data privacy law, many civil society organisations & privacy advocates argue that its potential has been undermined by a lack of vigorous enforcement.
Criticism has been particularly directed towards the section of the GDPR that assigns enforcement responsibilities to authorities in the country where a company’s European Union HQ is located.
The focus has largely centred on Ireland, as it is home to regional offices of major tech companies including Meta, TikTok, Twitter, Apple, & Microsoft.
Overruled
On Mon., Irish officials revealed that they had been overruled by a European Union board. In addition to the 1.2b euro fine, the board mandated that Meta must delete all customer data it had ever collected.
Meta has frequently faced enforcement actions under the GDPR. In January, the company was fined 390m euros for compelling users to accept personalised advertising as a condition for using Facebook.
In Nov., it received penalties totalling 265m euros following a data breach. These cases highlight the regulatory actions taken against Meta in accordance with the GDPR.
