The European Union’s top data protection authority has fined Meta Platforms $1.3 billion for its handling of user data

Autor: Article based upon analysis from Reuters Breakingviews
2 min

Meta Platforms is acting as a Big Tech symbol in a cross-border data-sharing decision. A European Union data protection authority has slapped the $630 billion social media giant with a record fine for transferring Facebook user data from Europe to servers in its home country, the United States.

The $1.3 billion fine is a drop in the bucket for Meta, which has more than $40 billion in cash on hand. But the decision will have a big impact on the company’s business – and on the use of personal data for all technology companies.

The Irish Data Protection Commission’s decision gives Meta until October to completely stop transferring data from Europe to the United States.

That would be a chore so onerous that it could tempt Meta to stop operating Facebook in Europe, which accounts for about 10% of its advertising revenue.

There is one big caveat, however: If lawmakers in the United States and the EU can reach a new agreement on how to handle data transfers before the ruling goes into effect, Meta won’t have to comply with the suspension order in the future.

The Biden administration has been negotiating with the European Commission for a year to create a framework that would allow U.S. companies to transfer data while Europeans retain the right to challenge the data collection methods.

That talks are underway is a promising sign for Meta, and the EU is aiming for a deal by July. But even a new agreement might not address the core of tensions.

Two previous EU-U.S. data agreements in the past decade have been overturned over concerns that Europeans cannot control how that information is used by the U.S. government for surveillance purposes.

Even if the European Commission decides to approve the draft agreement released last December, it could be challenged in court or blocked by other authorities unless the U.S. permanently overhauls its own data protection laws.

The cost of a stalemate would be significant. About one-fifth of Meta’s total revenue, $116 billion last year, comes from the EU, as does nearly 30% of the revenue of its rival, Google parent Alphabet.

So it’s unlikely that U.S. tech companies will decide that Europe isn’t worth the trouble. Rather, the tension between data and cross-border surveillance authorities may become even more problematic for U.S.-based Big Tech.