A new European Union regulation requires that companies that collect user data within the EU store and process the data on servers in Europe. However, part of Facebook and Instagram’s data resides on US servers. In a report to the Securities and Exchange Commission, Meta said it would simply stop offering its Facebook and Instagram services in the EU if the company fails to comply with new EU regulations. Nick Clegg, Meta’s vice president of global affairs, believes this will be detrimental to many businesses in the EU. Many of these businesses rely on the company’s services and advertising.
Last week’s financial report caused Meta’s stock price to plunge 25% after the first daily active user drop in Facebook’s history. Meta lost $10 billion in 2021 on its investment in the Metaverse. However, Meta’s claims like this may just be putting itself in a better-negotiating position than actually taking action against its threat.
This new law by the European Union will not only affect Facebook and Instagram. Many American companies like Apple and others also have their servers in the U.S. The main reason why the EU wants its data on servers in Europe is because of data security. The U.S. laws allow American security agencies to access data on any server in the U.S. This means that if your data is in an American server, it’s in the palm of the U.S. government.
Gizchina News of the week
Meta’s market value plummets by $237.6 billion
According to recent reports, Meta is doing quite well in the market despite its recent huge losses. A few days ago, the company recorded a single-day loss of 26%. This is the largest drop in market value in the history of the US stock market. This means that Meta’s (Facebook) market value fell by over $237 billion.
Meta’s slump exceeded Apple’s previous record, which lost $182 billion in market value in September 2020, due to reasons such as lower-than-expected revenue forecasts. The seven biggest declines in stock market history have all occurred in the past two years, as valuations of Apple, Microsoft, Tesla and Amazon have all ballooned. Before 2020, the biggest drop came from Facebook — down $119 billion in 2018.
Meta’s falling value comes at a time when the company is looking away from existing businesses. Facebook, Instagram, and WhatsApp are put aside and it is investing in a new technology-based virtual world called Metaverse. The new investment is actually affecting the company’s performance, at least for now. Meta CEO, Mark Zuckerberg announced Wednesday that Meta will lose $10 billion in 2021 on its investment in the Metaverse.