Europe is not afraid of Meta's threat to withdraw from the local market, where will the US-EU data regulatory disagreement go?

In the area of data privacy and transfers, the dispute between European regulators and Facebook's parent company, Meta, is escalating.

The latest development: Meta said in its latest annual report that if the EUROPEAN Union and the United States cannot reach a new agreement on data sharing, the company may shut down its Facebook and Instagram operations in the European region. In response, Germany's Federal Minister of Economy and Climate Protection Habek and French Minister of Economy and Finance Le Maire responded that if you want to operate in Europe, Meta needs to comply with local data transmission regulations, which is related to the digital sovereignty of the Eu, and the EU is not afraid of Meta's withdrawal from the local market.

"I've been living without Facebook and Twitter for four years after being hacked, and my life has been fantastic," Hubbeck said. Le Maire echoed: "I can confirm that life without Facebook is very good." ”

Zhao Yongsheng, director of the French Economic Research Center and professor of finance at the National Institute of Opening Up to the Outside World of the University of International Business and Economics, said in an interview with the first financial reporter that in recent years, the United States has listened to EU politicians many times, coupled with the EU's higher requirements for data supervision, and the dispute between European regulators and US technology giants is continuous, "Because the European market is quite important to the US technology giants, the two sides will most likely compromise with each other." ”

Wang Jie, founder of Kenting Law Firm's W&W international legal team and a lawyer with many years of legal experience in technology enterprises, said in an interview with First Financial Reporter that the more pragmatic result of the negotiations between Europe and the United States in the field of data transmission is to establish the rules of the game recognized by both sides, "which can not only ensure that data is transmitted in a safe and reliable way, but also obtain practical and effective protection after transmission, and also make government supervision evidence-based." ”

Europe is not afraid

As for the threat of exiting the European market, Meta explained that this is due to the fact that European regulations related to data regulation prevent companies from managing the data of European users on SERVERS in the United States, which will adversely affect the company's business operations and financial condition.

In recent years, European regulators have gradually strengthened their supervision of data privacy, transmission and sharing. In 2020, the European Court of Justice ruled in the Schrems II case that data transfer standards in Europe and the United States failed to adequately protect the privacy of European citizens. That same year, the Irish Data Protection Commission ruled that Facebook was subject to standard contractual clauses to stop transatlantic data transfers. At the end of January, the European Parliament passed a proposal for a digital services law requiring "gatekeeper" companies (i.e. at least 45 million end-users per month and an annual turnover of 8 billion euros in the European Economic Area) to share data with competitors and regulators.

In Wang Jie's view, the reason why the EU has gradually increased its efforts to regulate data is related to the economic interests of the EU, "In recent years, many social networks and cloud service provider services need to rely on cross-border data transmission, which has become one of the fastest value-added areas of international trade in the United States." ”

Research by research firm Wilson Center shows that by 2020, the United States is the largest source of imports of EU trade in services. In 2019, in the field of digital economy, the trade surplus of the United States with the European Union reached $112 billion, and the volume of digital trade exports from the United States to Europe was 2 times and 2.7 times that of the Asia-Pacific region and Latin America.

Zhao Yongsheng believes that another reason for the EU's gradual increase in data supervision is due to political considerations. On the one hand, as an important right, the EU attaches great importance to protecting the privacy of citizens' data. On the other hand, in recent years, a number of incidents of the United States spying on important officials of the European Union and member states have been exposed, which has increased the distrust of the United States in many European countries.

In 2021, Danish radio quoted people familiar with the matter as saying that the US National Security Agency had monitored Denmark's submarine Internet cables from 2012 to 2014, and senior Officials from Sweden, Norway, France and Germany, and former German Chancellor Angela Merkel was among them. In this regard, French President Macron demanded that the United States must give an explanation, and Merkel said that "eavesdropping on friends" was unacceptable.

What is the future?

Regarding the progress of the dispute between the EU Meta, Zhao Yongsheng believes that although Meta threatens to withdraw from the European market, it may not really take this step, and the two sides will most likely reach a settlement. One of the reasons behind this is that the threat of withdrawal from the local market is the company's usual means of consultation with the local government.

Previously, the Australian government had asked Facebook to pay local news publishers. In protest, Facebook not only threatened to withdraw from the local market, but also once shut down the personal pages of Australian users, and even the weather channel was blocked.

Zhao Yongsheng also said that in terms of the current Internet development trend, Meta's dependence on the European market is higher than that of European users on the digital services provided by the company.

The European Commission recently said to foreign media that promoting the negotiations between Europe and the United States on data transmission is a way to resolve the dispute between the two sides on digital supervision. But the agency also said that given the complexity of the issue, there is a need to strike a balance between privacy and national security, and that will take time.

At the same time, the European Commission also said that the outcome of this negotiation can only provide the stable and certainty that both the United States and Europe expect if it is fully in line with the arrangements of the European Court of Justice.

Wang Jie believes that on the basis of the privacy shield and standard contract clauses that have been tried, Europe and the United States still need to work together to "brainstorm" and make slight "concessions" to each other in order to reach a lasting solution.

She further said that, first of all, this requires the United States and the United States to agree on whether and how restricted the transatlantic data flow and data transmission are restricted, and whether it can establish a solid legal basis for the free flow of data under the premise of guarantee. Second, the U.S. may also need to make more detailed provisions on data surveillance issues in its country, data protection issues, and compensation for data breaches. Third, the United States and Europe may be able to consider cooperation with multilateral organizations, seeking a common legal rule to clarify how data is transmitted and used, including how to be more legal and compliant when governments obtain data.

Zhao Yongsheng also believes that the negotiations between Europe and the United States on transatlantic data flows and data transmissions may be a transitional choice, "In the future, the two sides may use this as a basis to jointly negotiate with other countries at the multilateral level to establish a legal framework for cross-border data circulation." ”