Meta fined $1.3 billion for violating EU data privacy rules

Meta on Monday was fined a record 1.2 billion euros ($1.3 billion) and ordered to stop transferring data collected from Facebook users in Europe to the United States, in a major ruling against the social media company for violating EU data protection rules.

The punishment, announced by the Irish Data Protection Commission, is likely one of the most consequential in the five years since the European Union passed a landmark data privacy law known as the General Data Protection Regulation. Regulators said the company failed to comply with a 2020 ruling by the European Union’s highest court that data shipped across the Atlantic was not adequately protected from US spy agencies.

The ruling announced Monday only applies to Facebook and not Instagram and WhatsApp, which Meta also owns. Meta said it would appeal the decision and there would be no immediate disruption of Facebook’s service in the EU.

There are still several steps ahead before the company must cordon off the data of Facebook users in Europe – information that could include photos, contacts of friends, direct messages and data collected for targeting ads. The ruling comes with a grace period of at least five months for Meta to comply. The company’s appeal would lead to a drawn-out legal process.

EU and US officials are negotiating a new data sharing agreement that would provide legal protection for Meta to continue transferring information about users between the US and Europe. An initial deal was announced last year.

However, the EU decision shows how government policies are upended in the boundless way data has traditionally moved. As a result of data protection rules, national security laws, and other regulations, companies are increasingly being pushed to store data within the country where it is collected, rather than allowing it to move freely to data centers around the world.

The case against Meta stems from US policies that give intelligence agencies the ability to intercept communications from abroad, including digital correspondence. In 2020, Austrian privacy activist Max Schrems won a lawsuit to invalidate an agreement between the United States and the European Union, known as the Privacy Shield, that allowed Facebook and other companies to transfer data between the two regions. The European Court of Justice has said that the threat of US snooping violates the fundamental rights of European users.

“Unless US surveillance laws are reformed, Meta will have to fundamentally restructure its systems,” Mr. Shrems said in a statement on Monday. He said the solution was likely a “federated social network” where most personal data remains in the EU except for “essential” transfers such as when a European sends a direct message to someone in the US.

On Monday, Meta said it was unfairly singled out for data-sharing practices used by thousands of companies.

“Without the ability to transmit data across borders, the Internet risks fragmentation into national and regional silos, tying up the global economy and leaving citizens across countries unable to access many of the shared services we depend on,” Nick Clegg, Head of META Global Affairs, and Jennifer Newsted , the chief legal officer, in a statement.

the to rule, a standard fine under the General Data Protection Regulation, or GDPR, was expected. Last month, Susan Lee, Meta’s chief financial officer, told investors that about 10 percent of global ad revenue comes from ads served to Facebook users in EU countries. In 2022, Meta Revenues of approximately $117 billion.

Meta and other companies are counting on a new US-EU data agreement to replace one that was invalidated by European courts in 2020. Last year, President Biden and EU President Ursula von der Leyen announced the outlines of a deal in Brussels, but details are still being worked out. negotiation.

Jonny Ryan, a senior fellow at the Irish Council for Civil Liberties, said Meta faces the prospect of having to delete massive amounts of data about Facebook users in the EU. This can present technical difficulties given the interconnected nature of Internet companies.

“It’s hard to imagine how they could comply with that,” said Mr. Ryan, who has pushed for stronger data protection policies.

The decision against Meta comes around the fifth anniversary of the General Data Protection Regulation (GDPR). Initially billed as a model data privacy law, many civil society groups and privacy activists said it fell short of its promise due to a lack of enforcement.

Much of the criticism has focused on a provision that would require regulators in the country where the company is headquartered in the European Union to enforce far-reaching privacy law. Ireland, home to the regional headquarters of Meta, TikTok, Twitter, Apple and Microsoft, has faced the most scrutiny.

On Monday, Irish authorities said it had been overruled by a board made up of representatives from EU countries. The board insisted on a €1.2 billion fine and forcing Meta to process previously collected data about users, which could include deletion.

“The unprecedented fine is a strong signal to organizations that serious breaches have far-reaching consequences,” said Andrea Jelinek, chair of the European Data Protection Council, the European body that imposed the fine.

Meta has been a frequent target of regulators under the General Data Protection Regulation (GDPR) In January, the company was fined €390 million for forcing users to accept personalized ads as a condition of using Facebook. In November, he was fined another €265m for the data leak.