Tech Gadget Central Latest Tech News and Reviews
Meta’s earnings call yesterday was upbeat on better-than-expected revenue. However, buried in its investor disclosures is a stark warning on looming regulatory risk in Europe, where a decision is expected in a matter of weeks (by May 12) that could force the tech giant to suspend its transatlantic data flows.
Meta’s CFO wrote in its Q1 2023 report that the Irish Data Protection Commission (IDPC) will issue a decision in May in its previously disclosed inquiry relating to transatlantic data transfers of Facebook EU/EEA user data, including a suspension order and a fine.
The ongoing dispute between US surveillance laws and EU privacy rights has been covered here and here. Regular readers know that Meta hopes a new high-level data transfer pact will resolve EU data export legal uncertainty and save it in Europe.
However, negotiations over this replacement deal have taken longer than expected, and EU institutions are still reviewing the December Commission draft decision. In December, the bloc revised its estimate, saying it hoped the deal would be finalized by July 2022.
Since then, multiple EU institutions reviewing the deal have raised concerns, so there’s no clear timeline. (Or whether a new deal will survive the inevitable legal challenges, given the EU Court of Justice invalidated the two prior pacts.)
In its earnings report, Meta tells investors it’s hopeful the new EU-US data framework will arrive soon enough to be implemented before the deadline for a suspension of its EU transfers, which would allow it to reboot its claim to have an authorized mechanism for its EU transfers and avoid the suspension order. However, the company also warns it “cannot exclude the possibility” that adoption won’t happen soon enough.
“Our ongoing consultations with policymakers on both sides of the Atlantic continue to indicate that the proposed new EU-U.S. Data Privacy Framework will be fully implemented before the deadline for suspension of such transfers, but we cannot exclude the possibility that it will not be completed in time,” Meta writes. “We will also assess how the IDPC decision may affect our data processing operations even after a new data privacy framework is in place.”
The social media giant was asked how regulatory orders to suspend EU-US data flows might affect revenues during an investor call. CFO Susan Li responded by hoping the new high-level framework will save it. She warned investors that this escape hatch may not open in time. Meta is losing “roughly 10%” of its global ad revenue from EU Facebook ads.
Li cautioned that Meta cannot predict the overall impact of an EU data suspension without knowing the final order’s terms, such as its duration.
Meta’s CFO previously reported that ad revenue growth was strongest in the “Rest of World” segment (9%), followed by North America and Asia-Pacific (6% and 4%, respectively), while Europe declined 1%.
