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Meta's $1.2 Billion Dollar EU Fine Could Affect Facebook Users

Meta's $1.2 Billion Dollar EU Fine Could Affect Facebook Users

  Irish data protection authorities have issued a record fine against Facebook and ordered that it no longer send EU user data to the US, dealing a blow to both companies that is likely to have far-reaching implications. This decision stems from an 18-year legal battle fought with Austrian privacy advocate Max Schrems and underlines the inconsistency between European privacy laws and US surveillance policies. How It Works Ireland's data watchdog recently issued record fines totaling nearly two billion euros and demanded Meta stop transferring European users' personal data to the United States as part of a stringent series of sanctions against Meta. This marked a pivotal point in Austrian privacy campaigner Max Schrems' long legal battle over US privacy rules brought forth by Austrian Max Schrems to ensure EU data protection laws reflect risks posed by Edward Snowden-leaked spying activities; his case also forced both entities to rework data transfer frameworks between both organizations resulting in both countries to overhaul data transfer frameworks being set forth between EU and US entities. Irish data protection authority (DPC) found Meta-owned company guilty of breaching GDPR as its use of standard contractual clauses did not adequately safeguard Europeans. Specifically, European Court of Justice ruling in 2020 found previous EU-US data flows agreement unlawful due to fears of US intelligence agency surveillance; DPC gave Meta until October to cease using SCCs or face further penalties of up to 4% of global turnover. Data privacy experts view Helen Dixon, Ireland's DPC, decision to issue the largest GDPR fine yet as groundbreaking. She says her action sends a clear signal that companies cannot ignore European data protection legislation. Furthermore, this sets precedent for cases involving US companies with complex webs of transfers across borders into Europe in future cases, they state. However, the DPC's decision shows its impatience with US businesses which have been slow in complying with EU data protection rules and could prompt many large US tech firms to suspend transfers as a result of this decision. They argue that restricting data transfers could harm their financial well-being and hamper their services, with local servers available only to European users being cost-ineffective for all the data collected here. They require sending it over to America in order to run their business effectively - forcing them into an intense race against time to find alternative solutions. Privacy Issues Meta has been issued a record $1.3 billion fine by European data regulators, forcing it to cease sending user data back to the US. Ireland's Data Protection Commission issued this ruling as a warning to organizations: serious infringements have far-reaching repercussions; as they serve as lead data privacy authority for Facebook and other US tech giants with European headquarters located here. The DPC stated that Meta was breaching EU laws by transferring personal data to the US using standard contractual clauses, which did not adequately protect data subjects' privacy. This practice violated both European law and an earlier ruling from Europe's top court which found US surveillance practices violated EU privacy rights. Meta has announced its intention to appeal the ruling and has devised a plan in case they lose. Meanwhile, they have informed users that personalized advertising in Europe will no longer be offered; however, businesses may still use Meta for other marketing needs. Meta is still confident about its future despite recent setbacks, according to an anonymous employee survey conducted by Fortune through Blind. Of current employees who participated, 81% believe the company can adapt its business to conform with new privacy regulations being introduced worldwide. A former Meta employee who specialized in regulatory matters noted that its large size and resources would allow it to quickly adapt in response to data protection regulations that come into force around the globe. The DPC's decision could serve as a foretaste of what's to come if the company doesn't successfully appeal or reach an agreement with EU data protection authorities. Negotiations on Privacy Shield 2, an EU-US data transfer arrangement designed to facilitate transatlantic data transfers between Europe and America have been deadlocked for months due to pressure from lawmakers from both regions - though an updated version was scheduled to go into effect this summer but so far hasn't materialized. Legal Issues Although Meta was rebranded last year, its image and public trust remain severely diminished due to a legacy of supporting hate speech and disinformation campaigns. Furthermore, numerous privacy concerns are plaguing investors. As one example, the Federal Trade Commission (FTC) remains actively litigious towards Facebook. Their lawsuit alleges that it violated antitrust laws by gaining an unconstrained dominant position in social networking through the purchase and integration of Instagram and WhatsApp, and using their data in its products. The FTC is taking a more measured approach than it did with its Privacy Shield complaint against Facebook, in which they requested suspension of data transfer between EU and US countries. That attempt ended up before a court and failed, and also now faces litigation by New York Attorney General Letitia James who accuses Facebook of failing to remove hate speech and other objectionable material from their platform. An adverse judgment against a company could produce substantial changes. Along with possible fines, they may be subject to court orders forcing them to revamp their privacy policies and provide users with greater control of their data - this may include restricting monetization of children and teenage data and stopping new services that require collection of such information from being introduced onto the market. Potential changes could also include mandating that Meta obtain fresh consent from its users for all future uses of their data, and to allow them access and retrieval. A ruling against the company would mean it no longer had recourse to previous FTC settlement agreements to justify its practices. Short term, any such ruling should have little impact on Meta's finances. They have already spent $5bn this year alone on safety and security efforts such as creating a team dedicated to removing hate speech and inappropriate material, while they have announced plans for a single login across their apps allowing users to login seamlessly from anywhere with just their Meta credentials. Impact on Facebook With whistleblower Frances Haugen revealing more of Facebook's inner workings, lawmakers are becoming more focused on whether new regulations could curb its power. While some progress has been seen so far in Europe regarding curbing this tech giant's reach and establishing clear legal guidelines about what it can do with user data. Meta, the former Facebook, recently received an unprecedented record fine of 1.2 billion euros ($1.3 billion). Ireland's data protection watchdog determined that Meta had violated an 18-21 decision made by European Court of Justice for breaching EU privacy laws by moving personal data between US-based companies and EU recipients without adequate protections being put in place first. Meta was forced by the CJEU ruling to utilize alternative arrangements known as Standard Contractual Clauses or SCCs to transport its data across the Atlantic, but according to the DPC these failed to mitigate risks posed by CJEU ruling and therefore should be discontinued. Meta is currently facing an uncertain situation regarding its services in Europe, as they could no longer comply with European data protection laws within a specified timeframe. As part of its response to DPC's decision, they stated they intend to appeal it, while continuing to use its technology for targeted ads targeting EU users with personalized ads by asking each one's consent prior to targeting ads at them. Even as the possibility of a suspension order looms, shares of this New York-listed company rose 2.5% early trading and reached near 15-month highs. This may be attributed to two factors; firstly the company has prepared for such an eventuality for some time and secondly US and European lawmakers are currently discussing a revised transatlantic data-transfer pact that could help its stock. Investor trust may also have played a part in this decision, since CEO Mark Zuckerberg controls 58% of voting rights through two-tier share structure. Facebook still has other options for dealing with its fine, including challenging it through European courts or appealing it directly.

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