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How Invalidation of EU-U.S. Safe Harbor Framework May Affect U.S. Companies

It’s very unusual for a decision of a foreign court on a technical subject such as data transfer to make headlines in the United States, but an October ruling by the Court of Justice of the European Union, Europe’s highest court, has resulted in dozens of articles in newspapers like the New York Times and Wall Street Journal and in technology-focused publications.  The CJEU’s decision in Schrems v. Facebook may have a significant impact on both U.S. and European companies.  The CJEU called into question the legality of trans-Atlantic data transfer practices and sparked alarm in American companies that have relied on the now-invalidated EU-U.S. Safe Harbor framework since its implementation in 2000.

This article addresses the impact the decision will have on any company that previously relied on the Safe Harbor, including U.S.-based social networks and providers of data hosting, storage, cloud services and data analytics.