Why Facebook & Instagram threaten to drop Europe

Technology and social media giant Meta, formerly known as Facebook, announced that it might shut down both Facebook and Instagram in Europe, the news quickly caught everyone’s attention.

So what is this really about? It all comes down to user data and the European data regulations that now want to prevent companies like Meta from transferring, storing, and processing Europeans’ data on US-based servers. Why is this crucial for Meta? The simple reality is that Meta, and several other businesses and services, rely on data transfer between countries in order to manage global operations and provide their services, including online advertising.

Let’s not forget that the users and their data are the real product, and as targeted ad sales are the primary source of Meta’s revenue then you can argue that advertisers are the consumers. Therefore, for Meta, every single user, and the data they generate is critical. This is what fuels the massive advertising business that Facebook and Instagram have built. As indicated in the annual report released by Meta on 2 February, more than 97% of their total revenue comes from advertising amounting to about $114 billion in 2021.

As both social networks have become invaluable B2B communication and advertising platforms, should we be worried? Not very likely. Europe is responsible for about 25% of Meta’s overall revenue, which makes it the second-biggest market after North America. It’s highly unlikely that giving up a market this size is an option for the social media giant. Looking at Facebook alone, it generates about $7 billion a year in advertising revenues from European countries – and anyone can tell you that’s a lot of zeros to give up on!

If you’re not familiar with how to use Facebook to create awareness for your business or generate hot leads, check out our blog here: Facebook advertising is not a luxury

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