EU and US reach agreement on data transfer

(Bloomberg) The European Union and the United States broke the deadlock of a new data transfer agreement, which could prevent a catastrophic scenario for tech giants like Meta Platforms Inc and thousands of other companies that rely on the free flow of information across the Atlantic.

The EU and the US announced on Friday that they agreed in principle to a new agreement after the previous one was annulled due to concerns about the power of US agencies to spy on information without proper guarantees of privacy.

This new agreement “will enable predictable and reliable data flows, balancing security, the right to privacy and data protection,” European Commission President Ursula von der Leyen said on Twitter on Friday.

While negotiators still have to work out the finer details, the result could end the uncertainty about data flows that led Meta, which owns Facebook, to warn of a possible exit from the EU if the legal vacuum persisted.

Legal fears escalated when the EU Court of Justice, the bloc's highest judicial instance, in a surprise 2020 ruling annulled the so-called “Privacy Shield”, a transatlantic transfer agreement, over the long-standing fear that citizens' data would not be safe from US surveillance.

While maintaining a separate contract-based system for continuing to transfer data, the doubts expressed by EU judges about US data protection have made this also a dubious alternative.

Friday's political agreement follows President Joe Biden's visit to Brussels, where he also participated on Thursday in consecutive summits with NATO, the Group of Seven and the EU.

The agreement aimed to ensure data privacy and security and protect data traffic “which forms the basis of a $7.1 trillion economic relationship between the US and the EU,” White House National Security Adviser Jake Sullivan told the press on Friday at Air Force One following the session in Brussels.

The agreement “really puts us in a position to ensure that US technology companies — big companies, yes, but especially small and medium-sized companies — will be protected as we move forward and will be able to operate fully and safely within the context of the transatlantic economic relationship between the US and the EU,” he said. Sullivan.

The 2020 ruling by the EU court forced regulators on both sides of the Atlantic and EU data protection authorities to return to the work table, to deal with the ramifications amid doubts about the security of EU users' data once it is sent to the US. The ruling meant that thousands of companies sending business data to the US had to look for alternative ways to keep their data flowing.

Data transfers have been plagued by difficulties for years, and EU judges are not afraid to intervene. In 2015, the EU's highest court overturned a previous transatlantic data transfer system, called Safe Harbor, for fear that US spies could gain unrestricted access to EU data.

The controversy dates back to 2013, when former contractor Edward Snowden exposed the scope of US National Security Agency espionage Privacy activist Max Schrems has challenged Facebook in Irish courts, where the social media company is European-based, arguing that EU citizens' data is at risk at the time it is transferred to the US.

Schrems said on Friday that he is not convinced that the new draft agreement will solve the problems of the previous ones and questioned the timing of the announcement.

“The agreement was apparently a symbol that Von der Leyen wanted, but it does not have the support of experts in Brussels, as the US did not move,” Schrems said in an emailed statement. “It is especially appalling that the US has allegedly used the war against Ukraine to put pressure on the EU on this economic issue.”

Original Note:

Big Tech Blackout Set to Be Averted With EU-U.S. Data Pact (1)

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