Last week, Meta debuted its Twitter competitor, Threads. The app gained more than 100 million users in the US, UK, and hundreds of other countries in less than a week — but you won’t be able to download it in the European Union anytime soon. The app has been held up by what Meta spokesperson Christine Pai described to The Verge as “upcoming regulatory uncertainty,” widely assumed to refer to the EU’s Digital Markets Act (DMA).
Tech companies and regulatory skeptics have long claimed that laws like the DMA hold back innovation by requiring onerous user protections, but the looming competition law doesn’t stop Meta from introducing new products — and Meta hasn’t indicated it will forgo a European launch. If anything, the DMA adds friction to slow down a product’s launch and force the company to evaluate how it protects users before letting it out in the wild — even if it diminishes Threads’ popularity out of the gate. But there’s still plenty of uncertainty as companies wait for more guidance later this fall as well as an open question: will complying with Europe’s rules undercut the design that’s let Threads grow so quickly?
The DMA adds friction to slow down a product’s launch and force the company to evaluate how it protects users before letting it out in the wild
Pai and other Meta reps have declined to blame any one of Europe’s many tech regulations for the Threads delay. But interviews with Instagram head Adam Mosseri suggest the EU’s Digital Markets Act is at fault. The regulation, passed last year, includes a host of new rules that intend to rein in companies it’s defined as “gatekeepers” — which hit a certain user base and market cap threshold — from abusing their market power. Meta and other Big Tech companies like Google and TikTok, were formally designated as gatekeepers earlier this month, providing them with six months to prepare before any enforcement actions could take place.
Mosseri attributed the postponement to a variety of issues. But he specifically noted rules preventing Meta from mixing the data it collects from users across products like Facebook, Instagram, and WhatsApp.
“It’s not just disclosures and consent. It’s also verifying that there’s no data leakage,” Mosseri told The New York Times’ Hard Fork podcast on Thursday. “You have to put in place processes and technology that all but guarantee that anything you say, you can verify; and usually multiple ways.”
It doesn’t look like Threads collects vast amounts more data than Meta’s other services, and the mere collection wouldn’t get it into trouble. It’s the DMA’s rules around data mixing, or combining all of the data it collects on users to build advertising profiles, that could break the rules. German regulators already ordered the company to stop combining WhatsApp and Instagram data without user consent back in 2019. The DMA would apply similar rules all across Europe, forcing the company to require European users to opt in before their personal information could be combined across platforms.
Targeted advertising is an issue for most Meta services, but it might not be the biggest problem Threads faces. Much of the app’s immediate success can be attributed to its connection with Instagram. In order to make an account on Threads, users must connect their Instagram accounts and use the same account names. Then, they can use Instagram to automatically follow the accounts they were already following on that platform on Threads.
The problem is, the DMA bans gatekeepers from providing more favorable treatment to their own products on its platforms over that of its competitors, otherwise called “self-preferencing.” Self-preferencing has been used to describe how companies like Amazon and Google push their own products, like Amazon Basics and Google’s reviews, to the top of a user’s search results, putting their competitors at a disadvantage.
Georgios Petropoulos, Stanford Digital Economy Lab digital fellow, told The Verge in an interview on Thursday that Threads wasn’t an unambiguous self-preferencing case — but that it did raise concerns. “If it uses the existing popular products it has like Instagram, like Facebook, to promote this new platform, that could also be viewed as something,” said Petropoulos. “It’s not a clear violation of the self-preferencing obligation, but it could be considered this way.” The EU is expected to provide more guidance to companies this fall, potentially clearing up the confusion.
“It’s not a clear violation of the self-preferencing obligation, but it could be considered this way.”
Meta has already been forced to unwind some of its products due to EU intervention in the past. In 2020, Germany’s competition watchdog began investigating Meta for requiring Oculus (now Quest) virtual reality headset users to sign in to their accounts with a Facebook login. Last year, Meta ultimately caved and untied the headsets from the social accounts. Threads’ Instagram login requirement could cause similar problems for Meta but with costlier consequences. The DMA allows for fines of up to 10 percent of a company’s annual revenue for violations and even up to 20 percent for repeated infringements as well as additional nonfinancial remedies.
Many of the problems raised by the DMA could be solved by allowing users to create Threads accounts with just their emails, not Instagram accounts. Meta could decide to do this in the future. The question is whether that additional friction will slow the app’s tremendous growth — particularly because Meta took extra steps to make the app “sticky” thanks to Instagram, like only letting people delete their account if they sacrifice their Instagram account, too.
In his Hard Fork interview, Mosseri suggested that Meta would need to create new systems to prove that Threads was following all of the EU’s rules.
Mosseri referred to the Threads launch as “a lot more of a yolo launch than anything we’ve done in awhile.” That breakneck launch speed may fly in the US, but some lawmakers in the EU seem fine with waiting for it to be available later. With Threads’ sudden success, it’s unlikely that Meta would refuse to launch the app in Europe forever — and since the app launched with bare-bones features and an awkward algorithmic feed, they might get a more fully baked platform as well as one with more privacy protections.
“The fact that Threads is still not available for EU citizens shows that EU regulation works,” said Christel Schaldemose, a Danish lawmaker, according to Politico last week. “I hope Meta will make sure all rules are covered and complied with before opening up for EU citizens.”