Meta Angry at EU "May Shut Down Facebook and Instagram in Europe" Warning... Stock Down 5% (Comprehensive)

'Threats' over Concerns about Changes in EU Data Protection Regulations
Peter Thiel, Who Has Been with the Company Since 2005, Resigns from Board Position

Mark Zuckerberg, CEO of Meta
Photo by Reuters

[Asia Economy Reporter Jeong Hyunjin] Meta Platforms, the parent company of Facebook, has pressured the European Union (EU) by warning that it may shut down Facebook and Instagram operations in Europe. The company threatened to cease its business entirely if new EU data privacy regulations prevent it from transferring user data to the United States. Following the news, Meta's stock, which had recently plummeted due to poor earnings, fell more than 5% again on the 7th (local time).

According to Bloomberg and other sources, Meta stated in its annual report that "If a new transatlantic data transfer framework is not adopted, or if we are unable to comply with the existing Standard Contractual Clauses (SCC), or if we cannot find another way to transfer operator-related data from Europe to the United States, we may be unable to provide our core products and services, including Facebook and Instagram."

The reason Meta disclosed this is because European regulators are currently drafting new data privacy regulations governing the transfer of user data from Europe to the United States. Previously, in July 2020, the Court of Justice of the European Union ruled that the data transfer standards between the EU and the US did not adequately protect Europeans' personal data, limiting the ways US companies could send European user data to the US.

[Image source=Reuters Yonhap News]

Subsequently, in August 2020, the Irish Data Protection Commission issued a preliminary order to Facebook to stop transferring user data from the EU to the US. Facebook appealed last year, but the Irish court rejected the appeal. The Irish Data Protection Commission is expected to make a final decision on this matter in the first half of this year, and CNBC reported that if Meta does not comply, it could face a fine of $2.8 billion (approximately 3.4 trillion KRW).

Given this situation, Meta has demanded that the EU propose a way to transfer data and continue its business. Meta emphasized, "This will have a material and negative impact on our business, financial condition, and operating results."

In response, the European Commission told Bloomberg, "Negotiations on data exchange with the United States are ongoing, but due to the complexity of the issues and the need to balance data privacy and national security, it is taking time." Regarding Meta's warning about the possibility of service suspension, German Economy Minister Robert Habeck and French Finance Minister Bruno Le Maire responded at an event to reporters, saying, "We have not used Facebook for years, and life without Facebook has been fantastic. We are confident that life will be good without Facebook."

As Meta hinted at the possibility of withdrawing from the European market, the market was shaken once again. Meta's stock closed at $224.91 on the Nasdaq that day, down 5.14% from the previous day. Meta's stock has dropped about 30% since the beginning of this month.

Peter Thiel, who announced his resignation from Meta's board of directors on the 7th (local time)
[Photo by AP Yonhap News]

Meanwhile, Peter Thiel, co-founder of PayPal and a US investor who has served as a director at Meta for nearly 20 years, announced that he will step down from the board after Meta's annual shareholders' meeting in May. He became the first external investor in Facebook by investing in August 2004 and joined the board in 2005, becoming a symbolic figure. The Wall Street Journal (WSJ) explained that Thiel was the most conservative member of Meta's board and had a strong voice within the board, especially advising Meta CEO Mark Zuckerberg not to yield to public pressure regarding the political impact of social networking services (SNS).

Bloomberg reported, citing his close associates, that Thiel, a supporter of former President Donald Trump, appears to be resigning from the board to help Republican candidates in this year's midterm elections. They said he made this decision because he did not want his political activities to interfere with Meta.

This content was produced with the assistance of AI translation services.