Meta threatens to pull Facebook and Instagram from the European market – what does this mean for the music industry?
This will interest artists and labels active in Europe. Facebook parent company Meta Platforms is considering leaving Europe if the group is no longer allowed to exchange data from European users with the United States. This message – which you can consider a pure threat – was included in a document that it has filed with the US stock market regulator SEC.
It is not the first time that the company behind, among others, Facebook, WhatsApp and Instagram has been pulling that ‘stunt’. The threats are a reaction to what happened in 2020 when Facebook was told by privacy regulators in Ireland that it could no longer use standard contractual clauses to comply with privacy rules when sending data to the US, the so-called Privacy Shield. According to the European Court of Justice personal data is less well protected in the US than in Europe. Facebook immediately warned that stopping transatlantic data transfers could have a devastating impact on the company. The company relies on the processing of user data in order to provide targeted online advertisements.
An investigation is currently still being carried out by the Irish data regulator. Meta is therefore still waiting for a final decision in the case. That may come in the first half of this year. In that context, the US company is now warning that if a good solution is not found, “we probably won’t be able to offer some of our core products and services, including Facebook and Instagram, in Europe.”
The case started several years ago with a complaint from the Austrian privacy activist Maximilian Schrems about Facebook Ireland, the company’s European headquarters. Schrems had complained to the Irish data protection authority about Facebook Ireland’s transfer of personal data to its parent company in the US. He wondered whether they were sufficiently protected in the US.
Consequences for EU bands, labels and magazines
If Facebook were to quit the European market (which we frankly don’t believe they would do, it’s worth 21 Billion US dollars and their second biggest market) this could mean quite a blow to all those bands, labels and magazines who rely solely or heavily on Facebook for their promotional activities.
Our chief editor Bernard Van Isacker has been following the whole affair: “It basically is what I have warned about for years, namely not to put all your eggs in the Facebook basket. You simply do NOT own the data there, you rent it and each time you have to pay to reach your followers unless you get a post viral, which does not happen a lot. We have also seen it with the way they have been intentionally cutting the reach on Facebook and Instagram so that bands, labels and magazines have to pay in order to get their message across to their own fans, which often were bought in the first place via Facebook (which was an idiot decision in the first place). It’s like you would have to buy the same CD over and over again if you would like to listen to it. Bonkers. This problem does for example not exist with multinationals who sell goods that cost a bit more than a vinyl or CD. For those companies who are selling goods with a much higher value, the marketing spent on Facebook is actually quite ROI friendly so to speak. But, the ROI on Facebook is in most cases not really profitable for the music scene, unless you sell higher end goods where your spent is more balanced by the pricing of your products, I think of mega limited releases for instance or big boxsets.”
So what will happen if Meta really leaves Europe? Bernard: “Then it’s very simple, everyone who has only relied on the Meta platforms to spread their message will have a major problem if they don’t own their own data and websites. I see that most intelligent labels work on their own data, but all those who don’t, well, it will be game over I’m afraid. The same for magazines who heavily rely on Facebook to get the bulk of their traffic, it will be difficult to continue to be relevant. Anyhow, Facebook has already heavily cut down on the reach and outbound traffic for years so I think that should have been a big alarm signal to begin with for all those who have been sleeping over the years. For Side-Line I don’t see any problems, we have worked for years on our own channels which we own to get the word out. So far so good. But it will be very interesting to see if Zuckerberg has the balls to actually do it. On a side-note, apart from the music business, if it happens I think you can be 100% sure that all hell will break loose as Meta has made sure it became the most important platform for the majority of people to connect. Imagine you suddenly loose all the contact details of your friends on Facebook… now that I think of it, maybe it would be a good thing for many people (laughs). I’m sure the pubs will have more clients then.”
So that’s it then? Bernard: “Not really. Other platforms will take over and the European Commission has been working for years on its own search engine away from Google, so why not an own social media platform though I doubt those EC members are intelligent enough to understand the mechanics behind it. You should have seen the meetings regarding GDPR… rather funny. Some were completely clueless.”
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