USA and EU reach provisional agreement on data protection

BRUSSELS – The US and the European Union have reached a tentative deal allowing data on Europeans to be stored on US soil, deterring a growing threat to the transatlantic operations of thousands of companies.

The deal, announced Friday by President Biden and European Commission President Ursula von der Leyen, if finalized could resolve one of the most thorny outstanding issues between the two economic giants. It also allays concerns from companies like Meta Platforms Inc. and Alphabet inc

Google, which has faced increasing legal challenges related to data transfers underlying some of its operations in Europe.

A previous agreement to regulate transatlantic data traffic was ruled illegal by the EU’s top court in 2020. This ruling was the second time since 2015 that the EU Court of Justice found US safeguards for Europeans’ data insufficient. The court said the US had failed to provide EU citizens with effective means to challenge the US government’s surveillance of their data.

Officials and observers on both sides of the Atlantic expect any new deal to face renewed court challenges, adding to uncertainty over how long Friday’s deal will last.

Mr. Biden and Ms. von der Leyen gave no details on how the new deal would work and withstand legal challenges. The talks centered on whether the US could convince the EU – and its top court – with new administrative appeal mechanisms for Europeans, but without a change in US law that would require Congressional approval, people said have been informed about the talks in recent months.

Apple required apps to request user tracking permissions. Now tech giants and small businesses alike are saying they’re losing money because of the new privacy policy. The WSJ’s Shelby Holliday explains why these costs could be passed on to consumers. Illustration: Rafael Garcia

Mr Biden said the “framework underscores our shared commitment to privacy, data protection and the rule of law” and would allow EU authorities “once again to authorize transatlantic data flows that help build $7.1 trillion in economic relations with the EU.” to facilitate.”

Ms von der Leyen said the agreement “will enable predictable and trustworthy data flows between the EU and the US and will protect privacy and civil liberties”.

If successful, the data agreement would resolve one of the last major issues in US-EU relations in recent years. Last year, both sides agreed to a truce in their long-running battle over subsidies for Airbus SE and Boeing co

reached an agreement to lift US tariffs on steel and aluminum and have increasingly aligned their positions on China’s economic practices.

“Just as we did when we settled the Boeing-Airbus dispute and lifted the steel-aluminum tariffs, the United States and the EU are finding creative new approaches to bring our economies and our people closer together on shared values.” , said Biden. stood next to Frau von der Leyen in Brussels.

The deal, if passed, would be a major victory for thousands of companies across a range of sectors that transfer data from the EU to the US, many of whom have warned in securities filings of potential disruptions should they be forced to do so Cease transmission -Atlantic data flows.

On the brink was the ability of companies to use data centers in the US to do things like sell online ads, measure website traffic, or manage payroll in Europe.

Friday’s deal is particularly important for major US tech companies, which have urged diplomats to strike a deal to head off a growing number of cases in which European privacy regulators are ordering them or their customers to cut off their data transmissions to the US

In France and Austria, citing the 2020 EU court decision, regulators recently ordered certain websites to stop using Alphabet’s Google Analytics service because it sends information about users’ internet addresses to the US, where regulators say that this may be requested by government agencies. Similar cases are pending in other EU countries.

The Irish Data Protection Commission has also finalized a draft regulation under precedent from an EU court that could have forced Meta Platforms’ Facebook to stop sending certain data about its users to servers in the US because it could be implicated in surveillance requests. Meta has warned that such an order could force the company to stop offering some of its services in Europe.

However, privacy advocates and experts say such orders would likely be pre-empted by the new EU-US deal – at least pending a new court battle – as any settlement would need to address the same concerns the EU court raised in 2020.

Jay Modrall, a partner at Brussels law firm Norton Rose Fulbright, said the deal will “be a huge relief for a lot of companies,” although he added the deal is also likely to be challenged again.

Tech companies like Google and Meta praised the deal on Friday. The Computer & Communications Industry Association, which represents companies like Amazon.com inc

and apple inc,

said the deal should “restore legal certainty for thousands of companies that routinely transfer trade data between the EU and the US”.

“With growing concerns about global internet fragmentation, this agreement will help keep people connected and services running,” Nick Clegg, Meta’s vice president of global affairs, said on Twitter.

Major economies, including China and India, have in recent years considered privacy regulations that require companies to retain data within national borders for reasons of national security and privacy. In Europe, the dispute over data transfers has prompted some US companies to similarly move data or facilities to the block.

While many US companies like Microsoft corp

say they already comply with EU data protection standards, the upcoming deal will nevertheless clear the air for customers concerned whether their personal information could be monitored, said Julie Brill, the company’s chief privacy officer.

“This will start to build those bridges and build the trust that they need,” Ms Brill said.

The deal, announced on Friday, is the latest attempt to bridge more than two decades of contention over how to balance privacy and trade over transatlantic data flows. But while some lawyers and lobbyists in the US have expressed optimism that the new deal will stand up to legal scrutiny, some in Europe have said they believe a deal that doesn’t involve changes to US surveillance laws is unlikely to pass will The Court of Justice of the EU.

“We also had a purely ‘political agreement’ called #PrivacyShield in 2015 – but it lacked a basic legal basis and was dead when it arrived,” Max Schrems, the Austrian lawyer and privacy activist who led the cases involving two previous agreements named Safe Harbor and Privacy Shield, said on Twitter ahead of the deal.

write to Daniel Michaels at daniel.michaels@wsj.com and Sam Schechner at sam.schechner@wsj.com

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https://www.wsj.com/articles/u-s-eu-reach-preliminary-deal-on-data-privacy-11648200085 USA and EU reach provisional agreement on data protection

Ethan Gach

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