Zuckerberg’s Threads app faces regulatory battle

US tech titan Mark Zuckerberg has plunged into a high-stakes game of brinkmanship with the European Union by withholding his new Threads app from users in Europe, but analysts say he will struggle to win the fight.

THREADS

Threads, billed as the killer of Twitter, a platform that has tumbled into chaos under the leadership of mercurial tycoon Elon Musk, has added more than 100 million users in its first week in app stores.

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But Zuckerberg’s firm Meta said it could not be released in Europe because of “regulatory uncertainty” around the Digital Markets Act, an antitrust regulation that will not come into force until next year.

“The reason they gave made me laugh,” said Diego Naranjo, head of policy at campaign group European Digital Rights.

“The regulation is not uncertain, it’s very certain, it’s just that Meta doesn’t like it.”

His theory is that Meta will give Threads to the rest of the world and Europeans will become so vexed at missing out that they will pressure the EU to water down the DMA.

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Naranjo, for one, thinks the ploy will fail.

But either way, the rest of the big tech platforms will be glued to their screens as this fight could shape the future regulatory landscape in Europe for all of them.

‘FATAL’ BLOW

Meta and the rest are already regularly in trouble with EU regulators over their data gathering and retention policies.

They struggle to keep to the terms of Europe’s mammoth five-year-old data privacy regulation (GDPR).

When the DMA was announced, their reaction was muted as it seemed to be about business and competition, a simpler topic for them though not without pitfalls.

The DMA bans the biggest tech firms from favouring their own platforms, particularly problematic for the latest launch as Threads and Instagram accounts are linked.

But the DMA’s Article 5.2 contained a bombshell: the firms will be banned from transferring user data across platforms unless they get consent.

Berin Szoka, president of the pro-business US think tank TechFreedom, said the DMA’s rules would require Meta to ask for the consent of someone’s Instagram contacts before their data could be transferred to Threads.

“In practice, this could prove fatal to Threads’ rollout,” he said, as the network effect would be dead on arrival.

“I don’t really see a good way out here for Meta.”

Naranjo has little sympathy for Meta, saying the European embargo was just a “political push” by the firm against the EU.

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“We will see who loses more,” he said. “My guess is that Meta will lose more from not having 450 million potential customers on their network.”

‘QUESTION OF TIME’

The European Consumer Group (BEUC) said the Threads issue showed the DMA doing exactly what it is supposed to do.

“The DMA does not stand in the way of new products or innovation,” said the group’s competition specialist Vanessa Turner.

“It creates an environment for innovation from more competitors and at the same time protects consumers.”

Meta has left the door open for a Threads launch in Europe and few expect it to maintain its embargo indefinitely.

European law expert Alexandre de Streel said big tech firms would probably be hammering out compliance issues with the EU over the coming months.

“I think it’s more a question of time to understand the scope of the legislation and have a dialogue with the commission,” he said.

But Szoka suggested the EU might be about to get a dose of unintended consequences.

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“It would be particularly sad if DMA shields Twitter from competition,” he said.

Meta, he argued, had committed to making Threads compatible with its competitors, adding: “That’s something Twitter has only talked about.”

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© Agence France-Presse