This week the European Court of Justice struck down the “Safe Harbor” agreement between the U.S. and the European Union. Peter Swire, the Huang Professor of Law and Ethics at the Georgia Tech Scheller College of Business, said the decision will disrupt the way that many major online companies are able to offer unified services to consumers
Since 2000, the Safe Harbor had been a major mechanism that allowed global companies to transfer information about users from Europe, where there are relatively strict privacy laws, to the United States. Until the new decision, companies that promised to follow the Safe Harbor principles had a lawful basis for moving the data between the E.U. and the U.S.
The court struck down the Safe Harbor for basically two reasons. The first reason is about allocation of authority under E.U. law. In particular, the Court said that the independent privacy regulator in each country could make its own decision about whether data protections in the U.S. are “adequate” and thus good enough to permit export from Europe. The second reason was concern about what the Court called “mass and indiscriminate” surveillance by the U.S. government, as revealed by Edward Snowden. I have written separately to show why that part of the decision was based on a woefully inaccurate understanding of the actual U.S. law and practice.
The Court’s decision will disrupt the way that many major online companies are able to offer unified services to U.S. and European consumers. This week, companies are scrambling to see how and whether they can continue to have unified processes for handling customers on both continents. As the White House Chief Counselor for Privacy in 2000, I was on the negotiating team that created Safe Harbor. It is disappointing to have the Court declare that approach unlawful. It will be even more disappointing if the new Court decision effectively means that companies can no longer offer global information services, splintering the global Internet that we have relied on for economic growth and the spread of information in our information society.
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