Meta and the rest of the U.S. tech scene are in a real bind when it comes to Europe. Thanks to a series of legal rulings and regulatory decisions in recent years, Meta lacks any legal basis for exporting Europeans’ personal data to the U.S.—and although these cases have revolved around the Facebook parent, the same applies to other American companies, particularly in the consumer internet business.
Their only hope is that the European Commission—the EU’s executive body—quickly comes up with a new, long-lasting transatlantic data-sharing agreement to replace the two that have already been struck down by the bloc’s top court. Being a political animal, the commission is trying its best to make this happen. But as of this week, it’s increasingly looking like those efforts will be doomed.
If that does turn out to be the case, Meta will almost certainly have to withdraw Facebook and Instagram from the European market which accounted for 22% of the company’s revenue last quarter, and its U.S. peers could quickly find themselves in the same boat.
This is a long-running saga. If you’d like to catch up, here are our pieces on when the first such agreement (Safe Harbor) got killed in 2015, when its successor (Privacy Shield) was similarly struck down in 2020, and when Ireland’s privacy regulator decided last year that Facebook and Instagram also couldn’t use a backup legal mechanism to export personal data to the U.S.
However, the key point is quite simple: U.S. intelligence agencies have broad discretion to poke around Europeans’ personal data when it lands in U.S. data centers, and Europeans have no way to stop this from happening. That violates their data-protection rights under European law—hence the imminent threat of those data transfers being blocked.
The commission proposed a fresh data-sharing pact in December, a couple months after President Biden signed an executive order adding some safeguards to U.S. intelligence practices. Before it can cement the agreement, the commission has to first run it through the European Parliament and the European Data Protection Board, which is the umbrella body for the EU’s privacy regulators. Neither has the power to nix the deal, but their disapproval would nonetheless make it hard for the commission to formalize the agreement while retaining credibility.
The European Parliament’s civil liberties committee delivered its draft opinion a couple days ago, and it’s a big fat “no.” (The final opinion should be out next month, with a full parliament vote following in April.)
In its draft verdict, the committee said Biden’s executive order was unclear and imprecise, and failed to stop U.S. intelligence from collecting Europeans’ data in bulk—EU law requires targeted surveillance. It also criticized the “Data Protection Review Court” that the order would set up for Europeans who want to stop U.S. spies hoovering up their communications, saying it would operate in secrecy and lack independence from the White House.
“The EU-U.S. Data Privacy Framework fails to create actual equivalence [to EU law] in the level of protection,” the committee wrote, urging the commission not to follow through with the deal. We can expect the European Data Protection Board to release its own opinion in a few weeks, and I would be extremely surprised if its verdict wasn’t roughly the same.
Again, these opinions are not binding, and the commission could press ahead with the agreement nonetheless. But if that’s how it plays out, the commission would be roundly attacked in Europe for ignoring citizens’ fundamental rights in the name of political expediency—and the EU’s top court would probably strike the deal down in a couple years anyway. If the aim is to give U.S. tech firms certainty that they can keep operating legally in Europe, that’s not going to happen anytime soon.
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David Meyer
Data Sheet’s daily news section was written and curated by Andrea Guzman.
NEWSWORTHY
YouTube CEO steps down. Susan Wojcicki dropped a surprise bit of news on Thursday morning, announcing her plans to step down after nine years in the role and 25 years at YouTube’s parent company, Alphabet. Neal Mohan, another Alphabet veteran, will take the reins as YouTube CEO. We’ll have more on this breaking news in tomorrow’s Data Sheet.
Twitter’s bias study. As Elon Musk was about to complete his acquisition of Twitter, A.I. ethics researchers at the social media company were close to sharing findings about one of the machine-learning systems. It had incorrectly demoted some tweets mentioning any of 350 terms related to identity, politics, or sexuality, Wired reports. But uncertain how Musk would respond, the researchers shared the moderation bias study via an open access service known as Arxiv before Musk stepped in as owner. Since then, most researchers at the social media company have lost their jobs or resigned.
Called back into the office. Activision Blizzard employees are being phased back into the office for three days a week starting this spring and summer. Fortune reports that it joins other tech companies ushering workers back to in-person work, even while some may not be sold on the idea. Shortly before the return-to-office mandate was announced, a Twitter user claiming to be a Blizzard employee had warned that such a policy would lead to an “exodus of talent.”
Tesla’s union organizers are fired. At least 18 employees who took part in an effort to form a union at Tesla’s Buffalo factory were fired, according to a complaint filed by organizers to the National Labor Relations Board. In a tweet, the organizers said this is the reason they want a union at Tesla: “We’re angry. But this won’t slow us down or stop us. They want us to be scared, but they just started a stampede,” the organizers wrote.
Flip phones are in again. Some wonder if a bendable iPhone is in the works after Apple received a patent for “foldable electronic device.” If Apple does move forward to produce such a phone, it could serve as a competitor to Samsung’s line of foldable smartphones, such as the new Galaxy Z Fold4. And at a time when industrywide smartphone sales are plunging, a buzzy new phone format could be a big deal if it helps Apple steal market share from rivals.
FOOD FOR THOUGHT
A quiet A.I. strategy. As Microsoft and Google duke it out to become leaders in A.I., it may seem like Apple and Amazon are watching from the sidelines. But Wedbush tech analyst Dan Ives says the A.I. arms race is about to get more crowded, and he expects Apple to make A.I. announcements this year. The App Store could see A.I. integration, and the next generation of iPhones could see stronger A.I. capabilities.
From the article:
Amazon is another company likely evaluating the situation and the Google-Microsoft A.I. war, Ives said. Like Apple, the e-commerce giant is unlikely to be directly involved in A.I. applications for search engines, but the company has recently explored integrating generative A.I. similar to the technology powering ChatGPT with its web services division, Amazon’s on-demand cloud computing and API platform.
IN CASE YOU MISSED IT
Charlie Munger says BYD was his best investment at Berkshire Hathaway—it’s ‘almost ridiculous’ how much it’s beating Elon Musk’s Tesla, by Nicholas Gordon
Google is mismanaged and has ‘delusions of exceptionalism,’ entrepreneur who sold his startup to the search giant says, by Chloe Taylor
Ashton Kutcher doesn’t care if critics pan his movies. His ‘surprising’ talent as a VC investor lets him cherry-pick ‘fun’ acting jobs, by Eleanor Pringle
3D-printed organs may soon be a reality. ‘Looking ahead, we’ll not need donor hearts,’ by Carolyn Barber
Bad news, Tesla bulls: Elon Musk plans to keep running Twitter for the rest of this year, by Christiaan Hetzner
#BlockElon is trending as outrage mounts over Musk’s reported self-platforming—but he’s about to reclaim the world’s richest throne, by Azure Gilman
A major international law firm is using an A.I. chatbot to help lawyers draft contracts: ‘It’s saving time at all levels,’ by Chris Morris
BEFORE YOU GO
Get ready for weed ads on your feed. But only if you’re over 21 and live in certain states. Twitter’s updated ad policy now allows licensed cannabis-related companies to run ads, with restrictions, in states where the ads are legal. Twitter’s move to more widely allow cannabis ads goes beyond what any rival platform has done. At Meta, cannabis ads are restricted to political campaigns and elections, and they must come with a disclaimer.
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