Increasing regulation of data storage, transfer and localisation around the world, including in India, are increasing the “cost and complexity” of operations for Facebook. Meta Platforms, the parent company of Facebook, stated in its latest 10-K filing with the Securities and Exchange Commission (SEC), USA, that such moves are restricting the firm’s ability to serve targeted advertisements, the biggest revenue driver for Facebook and Instagram.
“Some countries, such as India, are considering or have passed legislation implementing data protection requirements … that could increase the cost and complexity of delivering our services. New legislation or regulatory decisions that restrict our ability to collect and use information about minors may also result in limitations on our advertising services or our ability to offer products and services to minors in certain jurisdictions,” a part of Meta’s 10-K SEC filing read.
The company’s regulatory filing stated listed worldwide governmental action, as a risk that could “impair” the ability to sell advertising, which in turn poses a threat to its core business model.
In India, a Joint Parliamentary Committee report on the Data Protection Bill, 2019 in December 2021 suggested extensive localisation of data in the country, as well as conditional restrictions on sharing of critical personal data across borders. Various industry bodies, including some that represent global technology companies, had expressed concerns on the postulates of the Bill – including its proposal to bring non-personal data under regulatory oversight, too.
Meta, too, has voiced its concerns around cross-border data transfer restrictions, globally. On Tuesday, February 8, Markus Reinisch, Meta’s vice-president of public policy for Europe, stated, “Much like 70 other EU and US companies, we are identifying a business risk resulting from uncertainty around international data transfers. International data transfers underpin the global economy and support many of the services that are fundamental to our daily lives. Businesses across industries need clear, global rules to protect transatlantic data flows over the long term.”
Among other regulatory concerns highlighted by Facebook in its SEC filing, the company also stated that a large number of lawsuits that it presently faces, including one that is pending before the Supreme Court of India, as a key obstacle to the future of its core business model.
In its latest earnings call earlier this month, Meta reported bleak revenue forecasts, citing competition in the industry from global platforms such as TikTok, as well as Apple’s privacy-centric App Tracking Transparency feature that required Facebook and other apps to seek consent from users before tracking their activities across the internet – as key factors. The company’s lacklustre earnings erased $230 billion from its market value.