Privacy regulators beware: Facebook won’t passively accept strict regulations because it stymies innovation.
In a Financial Times opinion article Wednesday, Facebook’s public policy director in Europe Richard Allan said European privacy regulators are killing the internet business, and ultimately Europe’s financial success, by subjecting tech companies to unnecessary probes and strict regulations.
Facebook’s European base is in Ireland, which has less stringent privacy regulations compared to other countries in the European Union, and the social network models its privacy practices accordingly. But to Facebook’s dismay, several EU nations have launched investigations into Facebook’s privacy practices.
“If a car made in France or Germany had to meet separate technical requirements in Poland or Spain, Europe’s car manufacturers would face serious handicaps. BMW, Jaguar and Renault might not be the international success stories that they are. Consumers would not be as well served; the cost of selling in a new market would increase and some companies would not bother,” Allan said.
Regulators in the Netherlands, Germany, Belgium, Italy, Spain and France have joined forces to scrutinize the company’s services, including advertising and data-tracking habits. Europe is already known for its strong privacy laws, but the result of the investigations could mean internet companies that want to operate in Europe have to abide by each country’s privacy laws.
Allan contends that such national regulation not only limits innovation by discouraging entrepreneurship, but will keep customers from getting the latest updates and features Facebook is rolling out.
“Facebook’s costs would increase, and people in Europe would notice new features arriving more slowly, or not at all. The biggest victims would be smaller European companies. The next big thing might never see the light of day,” Allan wrote.
The seemingly veiled threat implies that Facebook — and potentially other tech companies — would possibly deny consumers functional updates, such as the company’s new video chat feature that lets users make VoIP calls via the Messenger app, to avoid ensuring new features are copacetic with EU privacy laws.
Facebook and privacy are longtime nemeses. The European Union is challenging a 15-year long data-sharing agreement with the U.S. and suing the social network for leaking consumer data to the National Security Agency. Facebook has repeatedly come under fire for its omnivorous data tracking, which includes private messages and even unsent messages and statuses.
While the public openly disapproves of Facebook’s methods, consumers largely don’t mind being tracked so they can get better, more relevant ads. The problem comes when people don’t know they’re being tracked or what data is being collected, and trying to opt out is either convoluted or not available. That information is usually buried in a company’s privacy policy, which no one ever reads because they’re long and written in legalese.
Facebook updated its privacy policy late last year to make it easier to read. It also expanded the amount of user data it would collect, including information from WhatsApp, the global messaging service the company acquired last year.
Facebook thrives with more than 1 billion users worldwide, and data — used to finely target each user based on their site and internet habits, — that gets parlayed into $5 billion in revenue from advertising, or about one tenth of the world’s ad revenue, the Atlantic reported.
In other words, Facebook stands to lose a lot if a large section of its market starts enforcing tighter privacy restrictions on what the company can and can’t collect. There are no comprehensive data privacy laws in the U.S., but since the NSA document leaks, the public and privacy advocates have pushed for greater transparency in business practices. While Allan’s sentiments targeted European privacy laws, they could be easily used to block or derail stateside efforts for better privacy protections.