It has been the stake or bluff of the week. In just five days, Meta, formerly known as Facebook, has gone from hinting that it could close some of its main businesses in Europe to saying that it will not.
The origin lies in the updating by Mark Zuckerberg’s company of the report that it must send to the SEC (the United States stock market regulator). It informs about the possible virtues and threats that your business may have. And there, as if dropped, he warned of the possibility of leaving the Old Continent.
Why? For a judicial tug-of-war that is on the way to celebrating a decade in the running and that has its roots in the Snowden case on the advisability of large technology companies transferring the data they collect on European soil to their servers in the United States. A debate that mixes privacy, the sovereignty of each territorial entity, but that usually goes unnoticed among the end users of these services. The issue was hot again for some time after a ruling on Irish soil (where Meta has its subsidiary in Europe as well as other technology companies) and which led to the end of the so-called Safe Harbor and the limitation of Privacy Shield, with the latest GDRP in between. If you are interested, here we explain more in depth.
In his Meta report he said:
If a new transatlantic data transfer framework is not adopted and we cannot continue to rely on SCCs or other alternative means of transferring data from Europe to the United States, we may not be able to offer some of our most important products. and services, including Facebook and Instagram, in Europe, which would materially and adversely affect our business, financial condition and results of operations.
However, just a few days later, Meta herself backed down saying that she only raised one possibility. In a certain way, Meta is right, since its obligation is to report all its possible weaknesses, but that does not mean that it has not taken advantage of the situation to gain a share of attention on this debate that, in any case, could force more companies in addition to Meta to stop providing some services in Europe.
But what would happen if something like this actually happened?
Although Meta is the one who has thrown the ordago, it would be she herself who would be the worst affected. In the midst of a free fall in its share price and some scandals that have led it to change its name, Meta has just announced in its latest results that it has lost users for the first time in its mature markets.
And, if it left Europe, the economic blow would be enormous. The European Union is the origin of 24.6% of its income, the second most important after the United States and Canada (43.7%) and ahead of Asia-Pacific (22.7%). That translates into $29.057 million that would vanish for Zuck’s company. A lot of money.
But beyond that, the little concern it has caused at the political level has also drawn attention. For example, the German and French finance ministers, Robert Habeck and Bruno Le Maire, have respectively said things like “after being hacked I have lived without Facebook and Twitter for 4 years and life has been fantastic”. Or “I can confirm that life is great without Facebook.”
It is clear that there may be people who did not miss it. But it is also true that there is a market and many businesses that depend in part on their social profiles. Facebook has more than 10,000 employees in Europe and planned to double that figure, employees linked to marketing, developers of companies that base their business on these networks… The gap in the workplace would certainly be important and the technological contribution of Facebook or Instagram and let’s not say WhatsApp, which does not appear in the conversation but is used more massively as the main chat in markets such as Spain and the United States, is there.
An EU that with regulation wants to make way for its startups
Photo by ALEXANDRE LALLEMAND on Unsplash
It also seems clear that in the many legislative battles that the EU is waging with North American technology companies, it is not just about preventing a possible digital colonialism by the United States, but also about trying to make room for startups that could offer those services from Europe. business models around information.
Leaving out the case of Spotify, Europe has not promoted any major global brand linked to the information and distribution of content on the Internet.
But why has Europe arrived like this facing the end of the first third of the 21st century? The analyzes are very varied and range from the presence of a very strong industrial sector, the lower private initiative compared to the United States – or public compared to China – or the excessive permissiveness with which the doors were opened to American Big-Tech in the first 2000 at a time of global economic growth and a certain lack of concern. Other opinions, such as the one expressed by Kevin Allison, an industry analyst in Berlin, to The New York Times stressed that Europe’s leadership in internet regulation -fake news, anti-trust sanctions, privacy- has also served to ward off large technology initiatives.
All this results in Spotify being the only European option linked to the treatment of online content that has exceeded 50,000 million dollars in valuation, a figure that only two other European technology companies have managed to surpass: the German company dedicated to statistical software, management and big data SAP, and the Dutch semiconductor provider ASML.
In the following lines you can see the TOP-10 of European technology companies by their valuation, with Spotify now occupying the third place.
The sum of the valuation of these ten companies, yes, do not jointly exceed the market value figures of any of the North American GAFAM, and companies such as Intel, Cisco, Oracle or Adobe also exceed the most powerful of the of the old continent.
In short, it is possible that if Facebook or Instagram were to leave the EU, a market would be fostered by finding a local replacement for them.
And meanwhile, all to Twitter
And while? It is clear that other social networks would take their place (if they were not prohibited from transferring data to the United States). The blackout suffered for several hours of Facebook services in October last year give an idea of which services would benefit the most.
So, Twitter was the social network that we all seemed to go to to laugh at the situation and partly to look for information about what was going on. The official profile of the social network launched a message greeting “literally everyone”.
As a substitute for WhatsApp, Telegram, Discord or Signal triggered their activity. Replacing Instagram, TikTok but also Snapchat took advantage of the fall.
According to Sensor Tower, the use of Snapchat increased by 23%, Twitter by 11% and TikTok by 2%. As for possible replacements for WhatsApp, the use of Signal grew by 15%, while that of Telegram rose by 18% globally.
But beyond using other applications, another of the curious data that the fall of Facebook left us is how we go back to phone calls and SMS.
According to data released by Orange and Vodafone in Spain, there were 120% more calls than usual between 7:15 p.m. and 7:30 p.m., as well as an average increase of 55% in voice calls during the hours in which the service of Facebook was interrupted.
Surely all this within the anecdotal within the day on Facebook (now Meta) went black. Something that, despite the comings and goings of this week, seems complicated to happen.