The EU’s highest court struck down a deal that allows thousands of companies to easily transfer personal data from Europe to the United States, in a landmark ruling on Tuesday that follows revelations of mass U.S. government snooping.
Many companies, both U.S. and European, use the Safe Harbour system to help them get round cumbersome checks to transfer data between offices on both sides of the Atlantic. That includes payroll and human resources information as well as lucrative data used for online advertising, which is of particular importance to tech companies.
But the decision by the Court of Justice of the European Union (ECJ) sounds the death knell for the system, set up by the European Commission 15 years ago. It is used by over 4,000 firms including IBM (IBM.N), Google (GOOGL.O) and Ericsson (ERICb.ST).
The court said Safe Harbour did not sufficiently protect EU citizens’ personal data since the requirements of American national security, public interest and law enforcement trumped the privacy safeguards contained in the framework.