A Critical Event This Week Unrelated to the Virus

The European Union Supreme Court restricted the ability of companies to store data on servers in the US due to a lack of privacy protections under US law. In fact, the US has always done less to protect the privacy of its citizens than have other countries, and now that neglect is going to have a financial impact.

That actually puts the US at an inferior position to Brazil, which does adhere to EU standards for privacy protection — as do most South American countries. Instead, the ruling lumps the US with Russia, China, North Korea and other dictatorships as countries that place the state’s interest ahead of the individual.

This creates a mess for multinational companies with customers in Europe. It may force these companies to move their data storage outside of the US. It may also impact thousands of smaller US companies that conduct business in Europe. The belief is that the US government has access to any information stored on US soil, whether that information is supposed to be confidential or not. European rules allow individuals to maintain privacy against government intrusion.

It is also potentially a major problem for colleges and universities who cater to students from Europe. I’m not at all sure how they can handle this apart from offshoring their data storage.

The impact even reaches to online games. You could in fact see changes to everything you do online because of this ruling.

If you’re like my mother, who uses her computer for Solitaire and email and refused to get a smartphone, this ruling won’t matter. For the rest of us, this is a big deal.

Thousands of companies will face restrictions on storing information about European Union residents on U.S. servers, after the bloc’s top court ruled that such transfers exposed Europeans to American government surveillance without “actionable rights” to challenge it.

The surprise ruling Thursday from the European Court of Justice, which invalidates a widely used EU-U.S. data-transfer agreement known as Privacy Shield, is a victory for privacy activists who have long said the U.S.’s surveillance practices should make it ineligible to store European data.

The decision, which pits European data-privacy concerns against U.S. national-security priorities, will create legal headaches and potentially disrupt operations for thousands of multinational companies. Depending on how it is applied, the ruling could force some of them—including tech giants such as Amazon.com Inc., AMZN -0.30% Facebook Inc., Alphabet Inc. GOOG 0.29% and Apple Inc.—to decide between a costly shift toward data centers into Europe or cutting off business with the region.

Blocking data transfers could upend billions of dollars of trade from cross-border data activities, including cloud services, human resources, marketing and advertising, if they involve sending or storing information about Europeans on U.S. soil, tech advocates say.

The Wall Street Journal

When you combine this with the Trump administrations crackdown on H1-B visas, used to bring talented software people to the US, we may see a rapid and massive export of US IT jobs to other countries this fall. Canada stands to be a huge beneficiary — and it’s not letting Americans into the country. Just the jobs.


Sources:

  1. https://www.wsj.com/articles/eus-top-court-restricts-personal-data-transfers-to-u-s-citing-surveillance-concerns-11594888385?mod=djemalertNEWS
  2. https://www.livemint.com/news/world/european-union-s-top-court-blocks-data-pact-amid-fears-over-us-surveillance-11594949997426.html

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