Threads and the European Union

Meta’s new app not available in the EU

In early July 2023, Mark Zuckerberg published Meta’s (formerly known as Facebook) response to Elon Musk’s Twitter – now X. Emanating from the same developers of Instagram and Facebook, Threads, became an instant hit, with over one hundred million users in its first five days online. However, none of these users came from the European Union (the “EU”). Meta has explained that due to “regulatory uncertainties”, it was not ready to be rolled out and that is the reason why it isn’t available to European users. We would like to take a look at what these uncertainties could be.

 

The legal framework

In recent years, the EU has been focusing on the regulation of newly emerging technology such as the Markets in Crypto Assets Regulation (“MiCA”) which regulates cryptocurrencies and the Digital Operational Resilience Act (“DORA”) which regulates cybersecurity. However, what seems to be the main regulatory hurdle for Meta in the EU is the Digital Markets Act (the “DMA” or the “Act”).[1] This new Act is aimed at having a fair digital environment where small start-ups can compete with technology giants such as Meta. This is in-keeping with the EU’s principle of fair competition within the free market as enshrined in Articles 101 and 102[2] of the Treaty on the Functioning of the European Union (“TFEU”).

The DMA sets parameters to be able to define a company as a “gatekeeper”. The Act defines this term as a company which:

  • Has a significant impact on the internal market;
  • It provides a core platform service which is an important gateway for businesses to reach end users; and
  • It enjoys an entrenched and durable position, in its operations, or is foreseeable that it will enjoy such a position in the future.[3]

Once a company is defined as a gatekeeper, the Act imposes several obligations which must be abided by. These include allowing third parties to communicate to end users via the gatekeeper’s platform and allowing publishers to carry out their own independent verification of advertisements hosted by the gatekeeper. So far, six companies have been designated by the EU as being gatekeepers,  amongst which Meta, Alphabet (Google) and Apple.

 

Reasons why Threads will not be introduced for the time being in the European market

The Act also protects the user, ensuring that all data that may be processed by gatekeepers is safely stored and that it will not be used without the user’s consent. Companies like Meta, which operate more than one platform, tend to allow the intertwining of data between each of these platforms. As a result, this would allow the same user to have various linked accounts. This notion of linking of accounts has been a point of contention, with several jurisdictions looking unfavourably upon it. In fact, in 2019, the ‘Bundeskartellamt’[4], Germany’s national competition regulatory agency, ordered Facebook to stop linking user data without the user’s voluntary consent. The Treads app faces a similar dilemma due to it being available only to users with an existing Instagram account.

In the event of a breach of the DMA, the offending company would be liable to a fine of up to 10% of the total worldwide annual turnover. This could even be raised to 20% in the case of multiple offenders. Period Penalty payments may also be imposed which could reach up to 5% of the average daily turnover. In a case where such penalties are not enough, the European Commission would have the power to impose any remedy, which could be either behavioural or structural.

In order for Threads to be at par with EU’s standards, certain issues would need to be tackled. Many have claimed that the fact that Meta has not yet launched the platform in the EU shows that the regulation is effective in keeping big companies in check.[5]

 

Main Takeaways

Through this case we can see that the DMA stands as a testament to the European Union’s commitment to fostering fair competition and safeguarding user data in the ever-evolving digital landscape. As we await the potential arrival of Threads in the EU market, it’s evident that Meta and other tech giants must navigate a complex regulatory landscape.

At Zerafa.io we understand the importance of compliance with EU regulations, including the DMA and the General Data Protection Regulation (“GDPR”). Our team of experts is here to guide you through the intricacies of data protection and digital market regulations, ensuring that your business not only complies with the law but also thrives in this dynamic environment.

Regulatory uncertainties should not hold you back. Embrace the opportunity to expand your digital presence while safeguarding your users’ data. Contact us today to explore our comprehensive GDPR compliance services and stay ahead of the game in the ever-changing world of digital technology. Together, we can navigate the complexities of the EU regulatory landscape and ensure your success in the European

[1] Markena Kelly evaluating and commenting the issue in ‘the Verge’.

[2] The European Union regulates the competition in Title VII, Chapter 1.

[3] The term gatekeeper is defined in Article 3 of the Act.

[4] Press release of the relevant authority declaring the reasons.

[5] Matt Honeycombe-Foster reporting the issue in ‘politico’.