Let data flow

Contrary to what the Snowdenistas of the world might tell you, the recent ruling by the European Court of Justice (ECJ), which has scrapped the so-called safe harbor agreement existing between the European Union and the United States, is not good news. Instead, it will inflict unnecessary harm on Europe’s digital businesses and further erode the continent’s competitiveness.

The safe harbor agreement enabled companies like Google or Facebook to move personal data across the Atlantic. The legal challenge against Facebook, brought by Austrian graduate student Max Schrems, relied on Edward Snowden’s revelation of the access that American intelligence agencies had to personal data originating in Europe, thus infringing on Europeans’ rights to privacy.

Whatever one thinks of the substantive merits of the case, the judgment creates significant legal uncertainty, as it leaves its interpretation up to regulators in the EU’s member states. Under the strictest interpretation, the decision obliges companies to set up separate data storage facilities in Europe. That may not be a problem for the likes of Google, but it is likely to be a huge barrier for smaller businesses. And if regulators in different European countries decide to interpret the judgment differently, Europe’s digital markets will become even more fragmented.

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