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European privacy probes could cost Facebook, report finds

Probes into Facebook’s data practices in Europe may cost the social network financially, a research firm said Monday.

Regulators around Europe are investigating the firm’s advertising business, which touts its access to the reams of data Facebook gathers on its users.

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Much of the effort, led by the Netherlands, is looking at how Facebook uses data from services it owns — like WhatsApp and Instagram — to bolster its ability to target advertising. Agencies from Italy, France, Spain, Germany and Belgium have all signed on to the inquiry.

“This situation will play out over the coming months and years, and its impact on Facebook’s ad business could be substantial if the company is forced to limit or curtail some of its targeted advertising activities,” research firm eMarketer wrote in a note.

That looming question, as well as the patchwork nature of the region, makes it difficult to imagine Facebook increasing its revenue from Western Europe significantly.”

Facebook announced this week that advertisers on Instagram will soon be able to draw on significantly more data gathered on Facebook users.

There is growing evidence that concerns over how American companies handle data will hurt them with customers abroad. Europe, in particular, looks warily on leveraging consumer data for marketing purposes.

A study released this month found that revelations about U.S. intelligence agencies working with tech firms will cost technology companies more than $35 billion in foreign business by 2016.