© Reuters Meta (META) on a win streak as new transatlantic data transfer deal removes ‘key risk’
In addition to its new “Twitter Killer” Threads app, analysts are pointing to another recent “win” for Meta Platforms (NASDAQ:). Wells Fargo analysts said news on Monday that the EU approved a new transatlantic data transfer agreement “removes a key regulatory risk” for the company in the 2nd-half of the year.
“The agreement, which will take effect immediately, ends the legal limbo for tech companies such as Meta and Google (NASDAQ:) after two previous accords that established the legality of transatlantic data transfers were struck down in ’15 and ’20 by EU’s top court due to concerns around US surveillance practices and privacy issues,” the analysts commented.
Following the implementation of the new framework, Meta can now uphold the existing transatlantic data transfer practices without any disruptions, the analysts explain. This development eliminates a significant regulatory risk for the company in the second half of the year. To provide context, in May 2023, the Irish Data Protection Commission fined Meta €1.2 billion (€1 = $1.1004) due to GDPR violations and mandated the cessation of Facebook’s EU user data transfer to the US. Had the new agreement not been in place, Meta would have been obligated to adhere to this order by mid-October.
Despite the temporary relief offered by the new EU-US Data Privacy Framework, there are potential court challenges ahead, the analysts add. Lawyer Max Schrems, known for previous successful legal battles against similar agreements, intends to challenge the new deal in court by late August. Therefore, the firm maintains a cautious stance regarding the regulatory landscape in the medium to long term.
The firm maintained its Equal Weight rating and $313 price target on Meta.
