EU's Top Court Restricts Personal-Data Transfers to US, Citing Surveillance Concerns

By Sam Schechner and Valentina Pop

Thousands of companies may have to stop storing information about European Union residents on servers in the U.S., after the bloc's top court on Thursday ruled that such transfers expose Europeans to U.S. government surveillance without what it described as "actionable rights" to challenge it.

The surprise ruling from the EU's Luxembourg-based Court of Justice, which invalidates a widely used EU-U.S. data-transfer agreement called Privacy Shield, is a victory for privacy activists who have long said that U.S. surveillance practices should make it ineligible to store European data. But the decision will create legal headaches and potentially disrupt operations for thousands of multinational companies that do business in the U.S. and Europe.

Depending on how it's applied, the ruling could force some of them --including tech giants like Facebook Inc., Alphabet Inc. and Apple Inc.--to decide between a costly shift toward data centers into Europe, or cutting off business with the region.

Blocking data transfers to the U.S. could up-end billions of dollars of trade from cross-border data activities, including cloud services, human resources, marketing and advertising, tech advocates say.

Write to Sam Schechner at [e-mail] and Valentina Pop at [e-mail]

(END) Dow Jones Newswires

July 16, 2020 04:28 ET (08:28 GMT)

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