NEW YORK, May 22 (Reuters Breakingviews) - Meta Platforms (META.O) is acting as a Big Tech mascot in a cross-border decision about the transfer of data. A European Union privacy regulator charged the $630 billion social media giant a record fine over its transfer of Facebook user data from Europe to servers in its home country, the United States. The $1.3 billion fine is a drop in the bucket for Meta, which has over $40 billion in its cash coffers. But the resolution will have big impacts on its business – and the use of personal data for all tech companies.

The decision, handed down from the Irish Data Protection Commission, gives Meta until October to completely cease moving data from Europe to the United States. That would be such an onerous task that it could tempt Meta to consider halting Facebook’s operations in Europe, which account for some 10% of ad revenues. But there’s a big caveat – if lawmakers in the United States and EU can finalize a new agreement over how to handle data transmission before the decision takes effect, Meta won’t have to comply with the suspension order going forward.

The Biden administration has been negotiating with the European Commission for the past year to create a framework that would allow U.S. companies to transfer data while maintaining Europeans’ right to challenge the methods in which that data is collected. That talks are underway is a promising sign for Meta, and the EU aims to get a deal done by July. But even a new deal might not address the root of the tension. Two prior EU-U.S. data agreements in the past decade were struck down over concerns that Europeans can’t control how that information is used by the U.S. government for surveillance. That suggests that even if the European Commission decides to adopt a draft agreement published last December, it could still be challenged in court or blocked by other agencies unless the U.S. permanently overhauls its own privacy laws.

The costs of a stalemate would be steep. Roughly one-fifth of Meta’s overall revenue, which was $116 billion last year, comes from the EU, as does nearly 30% of income at its rival, Google parent Alphabet (GOOGL.O). So it’s unlikely that U.S.-based tech companies decide Europe isn’t worth the trouble. Rather, the tension between data and the cross-border watchdogs can become more troubling for U.S.-based Big Tech.

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CONTEXT NEWS

On May 22, the European Union’s lead privacy regulator fined Meta Platforms $1.3 billion for its handling of user information. The decision gives Meta five months to stop transferring users’ data to the United States. Meta responded in a May 22 blog post that it will appeal and seek a stay with courts to pause implementation.

In March 2022, the U.S. and European Commission presidents announced they had reached an agreement on a new framework to facilitate transatlantic data transfers. The European Commission published a draft of this agreement in December 2022, which is currently being reviewed for adoption by EU officials.

Editing by Lauren Silva Laughlin and Streisand Neto

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