Facebook badly needs to buff up its communications and public image to avoid fight with EU

A risk warning in the recent annual report published by Facebook’s holding company said it could pull the social network out of Europe over data transfer issues. James Moore says this serves as a reminder of the group’s image problem

Facebook has sought to clarify statements interpreted as a threat to pull out of Europe (AP)

One of the more amusing business stories to have emerged over the last week is the supposed threat by Meta – which is what Facebook calls its holding company now – to pull the social network and its Instagram unit out of Europe.

The furore was kicked off by one of a list of 24 separate “factors” which could “negatively affect user retention, growth, and engagement” listed in the group’s latest annual report.

The list was part of more than 30 pages of risk warnings. Because of how pernickety US securities law is, American companies tend to throw everything into these sections, including the kitchen sink (which may affect our business performance if it springs a leak).

They range from the glaringly obvious, such as saying things like the business could be hurt if we lose key staff (duh), to the outlandish such as, I don’t know, the business could be negatively impacted if a hackers collective brings the entire internet crashing down.

Meta pulling two key products from a market the size of Europe’s looks fairly outlandish, but the warning was fairly prominently positioned a couple of pages in, which certainly made it more likely to be seen than not.

For the record, it stated that the company may be “unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe” or “otherwise limited in our business operation” because of an ongoing imbroglio over transatlantic data transfers.

There’s history here. A deal that was supposed to protect the digital privacy rights of EU citizens was struck with the Obama administration, only to be thrown out by the European Court of Justice (ECJ) amid concerns that it still didn’t do enough to protect them from US snooping. The US does a lot of that, as a certain Edward Snowden demonstrated.

The situation has remained up in the air since then, with regulatory efforts aimed at finding a solution continuing.

If the warning – which it should be said has been included in previous Meta regulatory filings – was in any way intended as an attempt to put pressure on the EU to reach a deal, then it backfired spectacularly.

In the wake of the news, Germany’s economy minister and vice chancellor Robert Habeck said: “After I was hacked I have lived without Facebook and Twitter for four years and life has been fantastic.”

Bruno Le Maire, the French finance minister, joined by saying: “I can confirm that life would be very good without Facebook and that we would live very well without Facebook.”

Oops.

Right there is one of the consequences of the toxification of the Facebook brand. Do you think the two ministers would have expressed themselves quite so bluntly if, say, Apple had threatened to stop selling iPhones to Europeans because of some quirk of EU law?

Cue what was billed as a clarification from Markus Reinisch, Meta’s vice president, public policy Europe, who said: “There has been reporting in the press that we are ‘threatening’ to leave Europe because of the uncertainty over EU-US data transfers mechanisms. This is not true.”

Phew!

But wait: “We have absolutely no desire to withdraw from Europe; of course we don’t. But the simple reality is that Meta, like many other businesses, organisations and services, relies on data transfers between the EU and the US in order to operate our global services.”

And there was more: “Businesses need clear, global rules to protect transatlantic data flows over the long term and, like other companies across a wide range of industries, we are closely monitoring the potential impact to the millions of people and businesses who use our services as these developments progress.”

That looks a bit like saying “sorry, not sorry”.

You could, if you were Habeck, or Le Maire, still read the statement as a threat if you were so inclined, just a slightly more veiled one.

What is glaringly obvious from this affair is that Meta badly needs to apply some polish to its public image. It just doesn’t yet seem to have worked that out yet.

Here’s what I would have said: “We’re absolutely not threatening to leave Europe. This is a risk warning, which we are required to make under US Securities and Exchange Commission (SEC) regulations, and have made for the last four quarters. There is currently an issue with transatlantic data transfers that potentially affects numerous companies, including Facebook and some European firms too.

“We fervently hope this will be resolved and we are fully supportive of the efforts currently being made to do that. Facebook’s European customers can be reassured. We are an innovative and entrepreneurial company. While the issue presents us with a risk, we will do whatever it takes to be there for you.”

I think that would have served Meta far better than Reinisch’s statement and it took me all of five minutes to cook up. Nick Clegg (our former deputy prime minister is the group’s communications chief) take note.

As it is, the 70 other companies Facebook says are facing the same data transfer issue are probably gnashing their teeth. Facebook’s warning, and its subsequent “clarification”, probably haven’t helped with efforts to reach a solution. There is political mileage to be had in taking a hard line with it and the EU is big enough, and apparently more than willing, to do just that.

There’s a postscript here, and it’s not a happy one for Britons. Their government doesn’t have the same clout. It also has a long and ignoble history of kowtowing to the demands of US administrations and large US corporations.

The ECJ has always been a bogeyman among committed Brexiteers but the rest of us might have yet have cause to lament losing its protection.