The detail and possible value of the monetary penalty will remain under wraps until then, but the triplet of fines could add up to over €2 billion, financial statements by Meta indicate — setting a new record for the highest fines under the European Union’s feared General Data Protection Regulation (GDPR) received by a single company in one go.
According to filings in Ireland, Meta has set aside €3 billion for EU privacy fines in 2022 and 2023. Its platform Instagram already got slapped with a €405 million fine in September for violating kids’ privacy, and Facebook so far has accumulated €282 million in penalties for data breaches as well as a €60 million hit from the French. That leaves well over €2 billion earmarked by the firm for regulatory action.
That’s a substantial hit for Meta, which announced last month it was laying off 11,000 employees globally amid lower sales and major costs linked to the firm’s pivot to the metaverse.
Beyond hitting Meta’s pocket, the three fines expected within weeks could also put a bomb under its broader business model. The decisions stem from complaints filed by Austrian activist Max Schrems accusing the company of failing to have proper legal grounds to process millions of Europeans’ data. If the final decisions invalidate Meta’s argument that it’s processing data as part of a contract with users, the company would have to seek another legal basis for its data-fuelled ad targeting model.
The cases have also revealed deep fissures between Europe’s data watchdogs.
Ireland’s data protection commission largely backed Meta’s argument that it could claim it needs data to fulfill a “contract” with its users to provide personalized ads, in its draft decision issued a year ago. But that reasoning has long put Ireland in the minority amongst its colleagues. The Norwegian data protection authority said the Irish interpretation would render European data protection law “pointless,” according to a document obtained by POLITICO last year. The Irish regulator was also alone in voting against EU guidelines that banned companies from using the contract legal basis to use data to target ads.
The three decisions are likely to lay into the Irish regulator’s initial position and, more worryingly for Meta, amp up the pressure for the company to go scrambling for new legal ways to gather and process data on Europeans.
A Twitter executive in Ireland secured a temporary court injunction preventing Elon Musk from firing her in his mass layoffs at the social media giant.
Sinead McSweeney, Twitter’s global vice president for public policy, was granted the interim injunction on Friday by Ireland’s High Court, local media reported. The court order temporarily prevents Twitter from terminating McSweeney’s employment contract.
McSweeney claimed before the court that she received mixed messages from Twitter, according to the reports.
Even if she didn’t explicitly accept an exit package that was proposed to her, McSweeney said she had been locked out of Twitter’s Dublin office and of the company’s IT system, the Irish Examiner reported. Twitter lawyers however reassured her in an e-mail that they knew she didn’t want to resign and that her access to the IT system would be restored, according to the Examiner report. But McSweeney told the court that she was still concretely unable to work, the outlet said.
Musk, Twitter’s new owner, has fired thousands of employees across the globe since he took over the popular social network.
An email that Musk sent to employees on November 16 asked them to click on “yes” if they wanted to continue working for Twitter; McSweeney didn’t respond to that email, according to the reports.
The court injunction states that that email has no effect on McSweeney’s contract, but it doesn’t go as far as re-instating her in her job, as judges still have to take a final decision on her case, according to the reports.
After Elon Musk bought Twitter — and fired almost anyone whose job it was to deal with regulators — the social networking giant is now facing a flood of legal challenges across the European Union.
The question now is whether the EU’s watchdogs can live up to their ambitions to be the world’s digital policemen.
Ireland’s privacy regulator wants to know whether the company’s data protection standards are good enough. The European Commission doesn’t know who to ask about its upcoming online content rules. The bloc’s cybersecurity agencies raise concerns about an increase in online trolls and potential security risks.
Twitter’s unfolding turmoil is precisely the regulatory challenge that Brussels has said it wants to take on. The 27-country bloc has positioned itself — via a flurry of privacy, content and digital competition rules — as the de facto enforcer for the Western world, expanding its digital rulebook beyond the EU’s borders and urging other countries to follow its lead.
Now, the world’s richest man is putting those enforcement powers to the test.
Europe’s regulators have the largest collective rulebook to throw at companies suspected of potential breaches. But a lack of willingness to act quickly — combined with the internal confusion engulfing Twitter — has so far hamstrung the bloc’s enforcement role when it comes to holding Musk to Europe’s standards, according to eight EU and national government officials, speaking privately to POLITICO.
“This will be a major test for European regulators,” said Rebekah Tromble, director of the Institute for Data, Democracy & Politics at George Washington University. She is part of the advisory board of the European Digital Media Observatory, a group helping to shape the EU’s online content rulebook, known as the Digital Services Act (DSA).
“If Musk continues to act with intransigence, I think there’s an opportunity for European regulators to move much more quickly than normal,” she added. “These regulators will certainly be motivated to act.”
A representative for Twitter did not return requests for comment.
Regulatory firepower
The bloc certainly has the firepower to bring Twitter to heel.
Under the EU’s General Data Protection Regulation, companies can be fined up to 4 percent of their annual global revenue for failing to keep people’s personal information safe. The Irish regulator, which has responsibility for enforcing these rules against Twitter because the company’s EU headquarters are in Dublin, has already doled out a €450,000 penalty for the firm’s inability to keep data safe.
As part of the bloc’s upcoming content rules, which will start to be enforced next year, the Commission will have powers to levy separate fines of up to 6 percent of a company’s yearly revenue if it does not take down illegal content. Brussels also has the right to ban a platform from operating in the EU after repeated serious violations.
“In Europe, the bird will fly by our rules,” Thierry Breton, the French commissioner, told Musk — via Twitter | Kenzo Tribouillard/AFP via Getty images
Thierry Breton, the European internal market commissioner, reminded Musk of Twitter’s obligations under the bloc’s upcoming content rules in a call with the billionaire soon after his acquisition of the social network. Musk pledged to uphold those rules, even as he has pushed back at other content moderation practices that could hamper people’s freedom of expression on the platform.
“In Europe, the bird will fly by our rules,” Breton, the French commissioner, told Musk — via Twitter.
Yet over the last three weeks, European regulators and policymakers have struggled to navigate Twitter’s internal turmoil, according to four EU and national officials who spoke on the condition of anonymity to discuss internal deliberations.
The likes of Damien Kieran, Twitter’s chief privacy officer in charge of complying with Europe’s tough data protection standards, and Stephen Turner, the company’s chief lobbyist in Brussels, were among scores of senior officials who left since Musk took over.
Two of the EU officials, speaking about internal discussions on condition of anonymity, told POLITICO that multiple emails to Twitter executives bounced back after those individuals were laid off. One of those policymakers said he had taken to Twitter — scrolling through the scores of posts from the company’s employees announcing their departures — in search of information about who was still working there. A third official said the current confusion could prove problematic when the company had to reveal long-guarded information about the number of its EU users early next year.
Others have been fostering wider connections within the company, just in case. Arcom, France’s online platform regulator, for instance, has built ties with high-level executives outside of France and still had a contact in Dublin at the company to answer its pressing questions.
The policymaking blackholes — fueled by mass layoffs — have been felt beyond the EU.
Julie Inman Grant, Australia’s eSafety commissioner who previously ran Twitter’s public policy team in Asia, told POLITICO she had written to the company last week to remind them about its obligations to clamp down on child sexual exploitation on the platform. She had yet to hear back from Musk or other senior officials.
“We did have a meeting on the books with Twitter,” Melanie Dawes, chief executive of Ofcom, the U.K.’s communications regulator, told POLITICO ahead of her trip to Silicon Valley this week to meet many of the social media companies. “It was canceled.”
What about privacy?
Another open question is how Twitter with comply with Europe’s tough privacy rules.
Although the company’s chief privacy executive had been fired — and rumors swirled Twitter could pull out of Ireland in its cost-saving push — the Irish Data Protection Commission told POLITICO it had yet to open an investigation into the firm.
A spokesman for the agency said Twitter executives had assured Irish regulators on Monday that Renato Monteiro had been appointed as the company’s acting data protection officer — because it’s a legal requirement to have one — and no changes to how Twitter handled data had been made.
A data protection official said it was likely that Musk would move such decision-making powers to his inner circle in the United States | Justin Sullivan/Getty images
A key unanswered question is whether, in the wake of the mass layoffs, Twitter’s operations in Dublin are either shuttered or cut back to an extent that regulatory decisions are made in California and not Ireland.
Such a change would lead the company to fall foul of strict provisions within Europe’s privacy regime that require legal oversight of EU citizens’ data to be made in a firm’s headquarters within the 27-country bloc.
A data protection official, who asked to remain anonymous to speak candidly, said it was likely that Musk would move such decision-making powers to his inner circle in the United States. That potential pullback could allow any European regulator — and not just the Irish agency — to go after Twitter for potential privacy violations under the bloc’s data protection regime, the official added.
This story has been corrected to specify how multiple European privacy regulators may target Twitter for breaching the bloc’s rules if the company pulls out of Ireland.
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Mark Scott, Vincent Manancourt, Laura Kayali, Clothilde Goujard and Louis Westendarp
Twitter’s director for EU public policy Stephen Turner is among the thousands of employees laid off by its new owner Elon Musk, Turner announced on the platform Monday.
“After six years I am officially retired from Twitter. From starting the office in Brussels to building an awesome team it has been an amazing ride. Privileged and honoured to have the best colleagues in the world, great partners, and never a dull moment. Onto the next adventure,” he tweeted.
Since taking over Twitter, Musk reportedly sacked half of the company’s workforce — including lobbyists and content moderators. The deep cuts in the policy teams have raised concerned among regulators and politicians.
On Monday morning, two of Twitter’s six-persons-strong policy team in Brussels still had a job, one person with first-hand knowledge of the issue told POLITICO.
Turner spearheaded Twitter’s engagement and lobbying in Brussels at a time when the EU crafted a series of strict laws regulating privacy, content moderation, media freedom, online advertising and more.
Elon Musk has some new super fans: Russia, China and the Islamic State.
After the world’s richest man bought Twitter for $44 billion last month, officials and journalists linked to Russia and China — and even some jihadists — urged him to lift restrictions on their use of the platform.
So far, their pleas have fallen on deaf ears. But the repeated requests — including from high-profile figures like Maria Zakharova, the spokesperson for Russia’s foreign ministry — are part of efforts by these individuals to use Musk’s takeover as a chance to make a comeback on Twitter.
Right-wing extremist groups in the West have already heralded Musk’s ownership as a signal that they can post hate-filled and potentially illegal content online with little, or no, resistance.
Now, Russian and Chinese state-backed Twitter accounts have taken up the same free speech argument, demanding the platform reinstate them, remove labels that identify these accounts as linked to Beijing or Moscow, and allow them to post more freely, including on hot-button topics like the war in Ukraine.
“They are doing this to jump on the bandwagon now that the right-wing community are putting pressure on Musk,” said Felix Kartte, a senior adviser at Reset, a technology accountability lobbying group. “They are pushing it because everyone else is pushing Musk, too.”
A representative for Twitter did not respond to a request for comment. The company has previously said its policies regarding online hate content have not changed since Musk’s takeover.
The pressure is a crucial early test of Musk’s willingness to police his new platform. Fears are already mounting that under his leadership, Twitter could be reshaped to make it a more toxic place for political debate — and potentially even incite an increase in violent extremism or foreign interference within Western democracies.
The resurgence of interest from the state-backed and jihadist accounts comes as Twitter undergoes a fundamental shift under Musk. The South African-born billionaire laid off half of the company’s employees on Friday, including many in senior public policy and content moderation roles.
After Vladimir Putin’s forces invaded Ukraine, the European Union imposed sanctions banning content from the likes of Russia’s RT and Sputnik, a move that forced Twitter to adopt its own restrictions, which it expanded beyond the borders of the 27-country bloc. Now senior figures at RT — and Kremlin officials — are demanding Musk lift those measures.
Margarita Simonyan, RT’s editor-in-chief, and other prominent RT journalists, messaged Musk in the days before and after the acquisition to urge him to end the so-called shadow bans against their state-affiliated news organization. Those restrictions include RT’s content not appearing when people search on Twitter.
“Elon @elonmusk, since you’re all for free speech, maybe unban RT and Sputnik accounts and take the shadow ban off mine as well?” Simonyan wrote on Twitter.
George Galloway, a former British politician who now hosts a show on RT, called on Musk to remove the “Russia state-affiliated media” label that had been placed on his account.
Chinese accounts also jumped on the bandwagon. While Beijing blocks Twitter for its domestic audience, the country’s officials and state media have repeatedly used the platform to spread propaganda and attack other users who criticize the Chinese Communist Party.
In August 2020, Twitter began labeling these accounts as state-affiliated, and since then, there has been a significant drop in engagement, including likes and shares, of those accounts, according to an analysis by the China Media Project, a research group at the University of Hong Kong.
Ever since Musk bought Twitter, Chinese officials and state-backed journalists have been urging him to live by his free speech beliefs. He must “remove all those McCarthyist discriminatory” policies for Chinese accounts, according to a Twitter post from Chen Weihua, the European bureau chief of the state-run China Daily newspaper.
“Can you please free the warning to Chinese media to give us a better and pleasant experience? Thank you,” added Zhang Heqing, an official in the Chinese embassy in Pakistan in response to Musk when he said Twitter would become a bastion for free speech.
It’s not just authoritarian governments. Islamic State supporters are also pushing to get back on the platform.
Within jihadist online communities, Musk’s takeover of Twitter has been welcomed as an opportunity to return.
Before 2015, Islamic State-related accounts had posted indiscriminately, including videos and images of beheadings and other acts of violence. Over the last seven years, Twitter’s content moderation tools had forced such activity to go underground.
Yet the number of Islamic State-affiliated accounts on Twitter has seen a sharp rise, compared to the previous 11-day period before Musk’s acquisition on October 27. The activity includes jihadist-supporting accounts likening the global clampdown they face to Musk’s own statements that both the left and right of politics are attacking him. In the last week, Islamic State-related Twitter users have also held so-called Twitter Spaces, or online voice conversations, with at least one of the sessions called “The Islamic Caliphate is remaining and expanding.”
Yoel Roth, Twitter’s head of safety and integrity, said the company’s policies toward hateful content and so-called online trolls have not changed since Musk’s takeover. Twitter’s “core moderation capabilities” have not been hampered by the recent layoffs, which saw about 15 percent of Twitter’s global trust and safety team fired, Roth added.
Not everyone is convinced. “Through the changing of the guard, it seems as if Islamic State accounts have gotten more brazen,” according to Moustafa Ayad, executive director for Africa, the Middle East and Asia at the Institute for Strategic Dialogue, a think tank that tracks online extremism. “If you make others feel like the group is back, it ultimately creates a sense of relief, or that it’s alright to post again as the Islamic State.”
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According to the Financial Stability Board (FSB), a global financial standard-setter, most of the cryptocurrency market should be subject to the same tough rulebook that governs traditional finance.
The FSB, which was born in the wake of the 2008 financial meltdown to stave off further shocks, will propose the plan to rein in crypto to finance ministers and central bankers from the Group of 20 industrialized countries gathering in Washington next week, the plan’s chief architect, Steven Maijoor, told POLITICO.
“A lot of the activities in crypto assets and crypto assets markets resemble activities in the traditional financial system and therefore we take the approach: Same activity, same risk, same regulation,” Maijoor, who sits on the Dutch central bank’s governing board and oversees banking supervision, said in Prague in early September.
The move is set to put major crypto trading platforms on red alert, coming as the U.S. Securities and Exchange Commission seeks to impose securities regulation on cryptocurrencies and as the EU prepares its own rules for digital markets.
More broadly, the FSB’s work on digital assets is likely to act as a cold shower for crypto currencies that seek to expand their services without complying with regulations.
Regulators fear the lack of investor safeguards could see volatility in cryptocurrency markets spilling over into the traditional finance sector, as banks and money managers venture into the market.
Some $2 trillion of the market’s value has evaporated since its highs of November last year, triggering corporate collapses and exposing scams that left millions of crypto investors penniless. Risks within the crypto markets are still contained. But that could quickly change and threats could spill over to financial markets from various channels, according to the European Securities and Markets Authority.
Maijoor will present G20 policymakers with draft recommendations that he’s been developing with a team ofglobal regulators within the FSB since April with the view of securing financial stability as crypto goes mainstream. Countries around the world will need to decide whether new rules are needed for novel arrivals within the crypto market, such as digital wallets. The rest should be captured by new or existing financial rules.
“This is not only related to securities,” said the 58-year-old, who used to lead the EU’s securities regulator before getting a job at De Nederlandsche Bank. “There are also already some crypto activities that are captured by anti-money laundering laws and regulations and we can observe that also, in that case, there is non-compliant behavior.”
The example of companies skirting around dirty money safeguards is an easy one for the Dutchman to give. His central bank in late April fined the world’s biggest crypto exchange, Binance, €3 million for offering services to Dutch citizens without having cleared the required Dutch safeguards against dirty money — gaining a competitive advantage against its rivals. Binance objected to the fine in June.
The Financial Stability Oversight Council, chaired by U.S. Treasury Secretary Janet Yellen, said the crypto industry needs to be brought to heel in several areas | Alex Wong/Getty Images
Ministers and governors will also get updated recommendations on how to regulate global stablecoins, digital tokens that are tied to national currency or a reserve of financial products to keep their value steady. The stablecoin update is separate from the crypto recommendations and came in response to Facebook’s failed bid to introduce a virtual currency for some 2.9 billion social media users around the world.
Maijoor’s work will be subject to consultation, so companies and countries will be able to suggest changes to what will become the global blueprint for supervising the market.
Locking horns
The recommendations could embolden U.S. banking and markets regulators, which are increasingly taking the position that digital asset trading platforms and brokerages should follow existing regulations.
The Financial Stability Oversight Council, which is chaired by U.S. Treasury Secretary Janet Yellen and counts SEC Chair Gary Gensler and the heads of other federal agencies among its members, on Monday released a report that identified several areas where the crypto industry needs to be brought to heel.
“Crypto cannot exist outside of our public policy frameworks. That’s regardless of what [Bitcoin’s pseudonymous creator] Satoshi Nakamoto might have initially thought, or what market participants might say today,” Gensler said during Monday’s FSOC meeting.
Ripple and Coinbase, both major crypto exchanges that have locked horns with Gensler, will be hoping for a different outcome that involves new rules.
Coinbase has argued that crypto assets are more akin to commodities and that the SEC classifying them as securities is like putting a straitjacket on how the market could develop, especially considering those rules were developed in the 1930s. The Commodity Futures Trading Commission would be a far better fit, according to the exchange.
“I think it is reasonable to assume that none of the authors who drafted these securities statutes from the 1930s … did so while thinking of a day when a decentralized, cryptographically-based, automated financial instrument would be adopted en masse by millions of people in the United States and around the world,” Coinbase’s chief policy officer, Faryar Shirzad, wrote in a blog in July.
Sam Sutton contributed reporting from New York.
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