EU-U.S. Safe Harbor Pact Under Fire

October 2, 2015

The trans-Atlantic “Safe Harbor” trade agreement which allows companies to share online customer data between Europe and the United States has come under fire in the past few weeks. Yves Bot, the Advocate General of the European Court of Justice, recently ruled that American privacy rules did not offer European citizens enough protection against their online data being misused by companies or national governments and therefore, domestic regulators in each European country should have the right to suspend transfers of data about their citizens to the United States.   

The judges at the Court of Justice will deliver their decision on this issue on October 6 – a very quick turnaround from the initial ruling. The decision to move ahead with the announcement of the judgment suggests the court is aware of the importance of the ruling for a large number of businesses. Although Bot’s ruling does not have to be followed by the court, all U.S. companies that are currently certified under Safe Harbor – of which there are more than 4,000 – would be affected should the court agree with his decision. Many technology companies rely on transferring data between the two continents to power their operations, particularly for online advertising. Companies may not be able to offer new services to Europeans if such offerings relied on sending online data outside the 28-member bloc.  

The U.S. mission to the EU has responded that the basis for Bot’s ruling rests on numerous inaccurate assertions about intelligence practices of the United States. Washington and Brussels have been working to update the Safe Harbor agreement ever since the exposure by former contractor Edward Snowden of widespread National Security Agency spying. Despite Mr. Bot’s opinion, both U.S. and EU officials have stated that they continue to work to update the agreement, which is still being negotiated and should conclude soon. It is unclear now whether that would come before the court’s decision on Tuesday or afterward, but this is a decision that needs to be on the ad community’s radar screen.

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