US companies will now have to find a way to move data to their European partners. A European Union court ruled that the US is still able to spy on European citizens even with a transatlantic agreement. Called the Privacy Shield Agreement, this treaty lacks the strength to protect Europeans’ right to data privacy.
What Happened to the Privacy Shield Agreement?
Europe’s highest court, the Court of Justice, “struck down” the Privacy Shield Agreement. Both the United States and the European Union had signed it. Through the treaty, around 5,000 companies can ship data across continents. The EU Court of Justice also shared its decision in a Twitter post.
#ECJ: the Decision on the adequacy of the protection provided by the EU-US Data Protection Shield is invalidated, but @EU_Commission Decision on standard contractual clauses for the transfer of personal data to processors established in third countries is valid #Facebook #Schrems pic.twitter.com/BgxGAvuq3T
— EU Court of Justice (@EUCourtPress) July 16, 2020
Security experts have said that the United States does not have privacy laws in place that are equivalent to the EU’s own. Because of this lack, any “standard contractual clauses” between the US and EU become invalid.
US companies bear the brunt of this ruling. In a CNN report, Caitlin Fennessy said US companies now face the worst-case scenario. These companies will have to demand the EU “for guidance and reassurance.” Fennessy is the research director at the International Association of Privacy Professionals.
Why Did the Privacy Shield Agreement Get in Trouble?
Privacy advocate Max Schrems had battled against Facebook and the Irish Data Protection Commission for seven years. His case brought the Privacy Shield Agreement under fire. For seven years, Schrems had argued that the treaty does not protect European users from US spying.
With the ruling, Schrems rejoiced. He said the court ruling deals a heavy blow to Facebook and the Irish DPC. He hoped that this ruling would force the US to change its surveillance laws. If it doesn’t, US companies will have to find another market.
What Will the US Do About the Privacy Shield Agreement Now?
In response to the ruling, US Secretary of Commerce Wilbur Ross expressed disappointment. He wished the decision would not hamper the business relationship between the US and EU, which is worth $7.1 trillion.
Ross added that the US would study the EU decision. In the meantime, the US continues to follow the Privacy Shield Agreement.
