Meta, TikTok, and others divulge EU user figures as regulations pile up

The news: Some of the world’s biggest tech platforms are complying with new EU regulations. TikTok, Meta, Google, and Twitter provided information to regulations under a Digital Services Act (DSA) provision that requires “very large” platforms (defined as having more than 45 million active users) to disclose user figures by last Friday, February 17.

• Twitter said it has 101 million active users in Europe; TikTok reported 125 million; YouTube reported 401 million; and Meta reported 255 million and 250 million users for Facebook and Instagram, respectively.

Regulatory changes: The pace of regulatory probes in the EU, UK, and US targeting Big Tech’s way of business has sped up considerably in the last year or so, prompting tech companies to make concessions and disclose more info about their markets.

• The DSA and the General Data Protection Regulation (GDPR) are two major pieces of European legislation that target Big Tech’s ability to collect and use personal data for advertising purposes, especially when it comes to underage users. The two laws have been expanded in recent years, forcing Big Tech to adjust their businesses to stay compliant.
• On top of major regulatory shifts, Big Tech companies have been investigated and fined repeatedly over the last two years for anticompetitive behavior and misuse of users’ personal data.
• In an attempt to avoid further fines and restrictive laws, tech companies have started to offer concessions—Google said it would allow third-party ad exchanges to operate on YouTube, and several platforms agreed to participate in greater transparency around misinformation.

Is it worth the trouble? With regulatory fines piling up in Europe, there’s speculation about whether companies will ditch the combative market—last year, Meta floated the possibility of divesting from the EU entirely to combat regulation, though it later walked that back and relocated Instagram head Adam Mosseri to London.

• In short, the answer is no: Big Tech is not going to leave Europe any time soon. Aside from being deeply embedded in the region already, signs like Meta devoting funds specifically to paying EU fines show there are no plans to pull out. Plus, any divestment would leave room for competitors to steal market share.
• While recent fines add up to an amount that would make Scrooge McDuck tug at his collar, the reality is that enforcement of these new regulations happens at a snail’s pace. Most fines and penalties under the GDPR were issued in the last year, despite the law being over five years old. The same pace will likely follow for the DSA, giving platforms time to adjust.

Our take: Leaving Europe is out of the question for Big Tech, no matter how intense regulation becomes. But these platforms will have to get used to new normals around digital advertising and data privacy if they want to thrive and preempt future regulation.

• Increased Big Tech cooperation with regulators could also cast TikTok in an increasingly negative light. The app has been framed as a national security risk in the EU and US for its ties to the Chinese government and mishandling of personal data.