It seems every week another U.S. tech firm is being investigated by European Union regulators. In theory this is a good thing, as the EU rules are there to protect citizens' by defending their privacy rights and ensuring fair competition rules. Regulators keep the industry on its toes and don't do any harm to the customer, right?
For the first time, EU citizens may suffer consequence of all this legislation as Facebook is threatening to delay or cancel the roll-out of new features in Europe if regulators don't back off a little.
Facebook's European vice president of public policy, Richard Allan, made the explicit threat in an opinion piece he wrote (reistration required) for the Financial Times. He claims that recent regulatory movements by the EU go against the founding principle of the union, which was to make it easier to do business across the continent. "By making it harder to start and run an Internet business, they threaten to make Europe less prosperous and the web less useful," he wrote.
Facebook's EU headquarters are based in Ireland, so the company has to comply with the laws of the Irish data commissioner. By complying with these national laws, Facebook is allowed to operate in any other EU country without going through separate regulatory processes in each nation. That was the founding idea of the European Economic Community (EEC), which became the European Union, a process which allows companies to easily operate across all the member nations.
Allan claims that recent moves contradict this idea. The company faces a series of privacy probes across the continent, with regulators from France, Spain, the Netherlands, Germany and Belgium all opening investigations. Allan argues that Facebook should only be required to comply with the Irish regulators as that is where the company is based, and that these investigations are essentially a return to pre-EEC national regulation, which would threaten countless businesses in Europe.
"If a car made in France or Germany had to meet separate technical requirements in Poland or Spain, Europe's car manufacturers would face serious handicaps. BMW, Jaguar and Renault might not be the international success stories that they are," he wrote.
In a fairly explicit threat, Allan says this kind of regulation could threaten Facebook's business in Europe. "Facebook's costs would increase, and people in Europe would notice new features arriving more slowly, or not at all," he said.
Allan goes on to say that the regulation could hurt startups most of all as they don't have the financial wherewithal to deal with lengthy legal battles.
The article is a clear statement to the EU that Facebook isn't happy about how it is being treated. Allan calls for national regulatory authorities to work together as they have done in the past, rather than fragment the European single market.
It will be interesting if there will be any reaction from the EU or if, indeed, Facebook is willing to follow through on the threat. It would be surprising if European law is swayed by an op-ed in The Financial Times and even more so if Facebook was willing to disadvantage its hundreds of millions of customers in the EU.