The European Union has thrown another obstacle in the path of America's technology giants today by the suspending the 'Safe Harbour' agreement that governed the flow of personal data across the Atlantic.
The deal, which makes it easier for US tech firms to transfer information between their European and US operations, was inked by US authorities and the European Commission 15 years ago. But after a challenge by privacy campaigners, the European Court of Justice today ruled that Safe Harbour doesn't exempt individual EU countries from having to determine whether data transfers to countries outside of the EU comply with citizens' privacy rights.
In effect what this means is that each company that currently makes use of Safe Harbour (around 4,400 businesses) will now have to draw up 'model contract clauses' (MCCs) that guarantee they will comply with EU data protection standards. For Facebook, Google et al., this won't necessarily be a big obstacle to overcome (their lawyers certainly won't be too dismayed).
But the rulings implications stretch further than the tech giants. 'The ruling creates uncertainty for the European and International companies that rely on Safe Harbor for their commercial data transfers, most of which are small and medium-sized enterprises,' said Christian Borggreen, Europe director at the Computer and Communications Industry Association. 'We expect that a suspension of Safe Harbor will negatively impact Europe’s economy, hurt small and medium-sized enterprises, and the consumers who use their services, the most.'
The ruling could be particularly challenging for companies that use US-based cloud services (like online accounts and CRM software) and will now have to make sure the service they are using is covered by an MCC.
The most disruptive ripples of this ruling could be less tangible though. From Uber's reception in France and elsewhere to the ongoing Google competition investigation, Silicon Valley has received a less than hospitable reception in the European Union.
This is yet another blow for that relationship, and risks damaging the image of Europe as a place to do business. It has already drawn ire from the likes of PayPal founder Peter Thiel, who described the continent as 'a slacker with low expectations' last year. If things keep gong the way they are, he's unlikely to be the last American entrepreneur to lament Europe's attitude to tech.