U.S. President Joe Biden and European Commission President Ursula von der Leyen have announced that the U.S. and EU have reached a new trans-Atlantic data flow agreement in principle, following months of negotiations by officials on either side of the Atlantic.
The deal, details of which have yet to be revealed, is set to replace the so-called Privacy Shield, an arrangement allowing firms to share Europeans’ data to the U.S.
The Privacy Shield was invalidated back in 2020 when European Court of Justice (ECJ) ruled that that companies moving personal user data from the EU to other jurisdictions must provide the same protections given inside the EU bloc.
The legal battle started back in 2013, when Austrian privacy activist Max Schrems lodged a complaint with the Irish Data Protection Commissioner, Ireland housing Facebook’s EU HQ, arguing that considering the Edward Snowden revelations – which made public for the first time the extent of U.S. Intelligence Community access to personal data held by Facebook and other internet companies – U.S. law did not offer sufficient protection against surveillance by public authorities. His original complaint was brought against Facebook (now Meta) which was transferring his personal data to the US.
The case was referred by the Irish court to the ECJ, the highest court in Europe, to address whether Facebook’s use of standard contractual clauses provided adequate protection for personal data flow back to its U.S. subsidiary
Following several years of court cases, including a class action, Schrems successfully got the Privacy Shield (2020) struck down following its predecessor the Safe Harbour (2015).
Since the demise of Privacy Shield, two major obstacles have remained – the building of a workable redress mechanism for EU citizens in the U.S. and the ability of the U.S. to meet the ECJ’s standards for necessity and proportionality.
Both of which have had top execs from Meta, Microsoft, Google and a raft of others sweating for months. In fact Meta issued a warning with its annual report in February of this year, stating that ‘it is considering shutting down Facebook and Instagram in Europe if it can’t keep transferring user data back to the U.S.’
Meta said: “If a new transatlantic data transfer framework is not adopted and we are unable to continue to rely on SCCs (standard contractual clauses) or rely upon other alternative means of data transfers from Europe to the United States, we will likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe.”
The company added this “would materially and adversely affect our business, financial condition, and results of operations.”
In announcing the deal, President Biden said, “Today we have agreed to unprecedented protections for data privacy and security for our citizens. This new arrangement will enhance the Privacy Shield framework, promote growth and innovation in Europe and in the United States and help companies, both small and large, compete in the digital economy.”
He added, “This framework underscores our shared commitment to privacy, data protection, and the rule of law. And it’s going to allow the European Commission to once again authorize trans-Atlantic data flow facilitating $7.3 trillion in economic relationships with the EU.”
Von der Leyen said both sides “found an agreement in principle for a new framework for trans-Atlantic data flows. This will enable predictable and trustworthy data flows between the EU and US, safeguarding privacy and civil liberties.”
As expected, the deal was welcomed with optimistic caution by those with most to lose.
Meta’s president of global affairs Nick Clegg said “It will provide invaluable certainty for American & European companies of all sizes, including Meta, who rely on transferring data quickly and safely., whilst Kent Walker, the president of global affairs at Google praised the work undertaken by the European Commission and U.S. Government.
The announcement was made during a period of activity as the US and the EU seek to strengthen ties in response to the Russian invasion of Ukraine. A point not lost on Schrems who, when asked for his opinion on the announcement simply stated: “The final text will need more time, once this arrives, we will analyse it in depth, together with our U.S. legal experts. If it is not in line with EU law, we or another group will likely challenge it. It is especially appalling that the US has allegedly used the war on Ukraine to push the EU on this economic matter.”