By Gina Hall
In a ruling that will immediately affect Apple, Google, Facebook and many startups in Silicon Valley, the European Court of Justice (ECJ) declared the 15-year-old Safe Harbor data-transfer agreement invalid on Tuesday. The agreement governs the flow of data from European users of U.S.-based cloud services to the U.S.
The ruling affects the more than 4,500 U.S. companies which rely on Safe Harbor to transfer data and jeopardizes data traffic. The ruling states that national regulators within the EU can override the Safe Harbor pact because it violates Europeans’ privacy rights as it exposes them to surveillance by the U.S. government. The decision by the ECJ, the highest court in Europe, cannot be appealed.
Bundles of electrical wiring are seen in the server hall at Facebook Inc.’s data storage SIMON DAWSON/BLOOMBERG
The decision stems from a case brought by Max Schrems, a privacy activist who brought a suit against Facebook in Ireland claiming his privacy was violated by the NSA’s mass surveillance programs, revealed by whistleblower Edward Snowden. While Schrems is Austrian, the case originated in Ireland because Facebook’s European headquarters are in Dublin.
Now that the ruling has come down, the data regulator in Ireland will examine whether Facebook offered European users adequate data protections. The regulator could order the suspension of Facebook’s transfer of data from Europe.
The decision also means individual European countries can set regulation for U.S. companies’ handling of citizens’ data. Countries can now suspend the transfer of data to the U.S.
The big guys
“It’s quite a game changer,” Stuart Buglass, an international business expert at Radius, told the Silicon Valley Business Journal. “The really big players will meet this head on and go for localized service.”
Large tech firms, such as Apple, Facebook, Google and Amazon, will likely opt to build data servers within the EU and comply with local data regulation.
“To have an EU-based server would be the best way to go. You wouldn’t have any data transfers,” said Buglass, who also noted that this change will come at great expense to the companies.