In this photo illustration, the Facebook logo can be seen on a smartphone screen with the EU flag in the background.
Chukrut Budrul | SOPA pictures | LightRocket via Getty Images
LONDON – Facebook faces a potential ban on transferring Europeans’ data to the US. According to experts, it would be a “blow” to the social networking giant and would have a serious impact on other major American technology companies.
Last week, the Irish High Court dismissed a lawsuit brought by Facebook over an administrative investigation that could result in a ban on the flow of its user information from the European Union to the US
This came after a landmark decision by the EU Supreme Court invalidated the use of Privacy Shield, a framework for transatlantic data exchange.
The decision was a victory for Max Schrems, an Austrian data protection activist who brought Facebook to court for how it handles data on European citizens. Schrems argued that in light of the revelations made by the American whistleblower Edward Snowden, US law did not provide adequate protection against surveillance by the authorities.
In September, the Irish Data Protection Commission sent Facebook a preliminary order to stop using an alternative tool known as Standard Contractual Clauses to send user information from the EU to the US
Facebook said the move would threaten its European operations and ensure a temporary freeze on the order.
The way Facebook transfers data from the EU to America is threatened again. On Thursday, the Irish High Court will hold a brief hearing that is expected to lift Facebook’s suspension of the DPC’s order and its investigation into the flow of data between the EU and the US.
“Like other companies, we followed European rules and relied on standard contractual clauses and adequate data backups to provide a global service and connect people, businesses and charities,” a Facebook spokesman told CNBC.
“We look forward to defending our compliance with the DPC as your tentative decision could harm not only Facebook, but users and other businesses as well.”
In the event that Facebook is forced to stop transferring Europeans’ information to the US, experts believe the company will likely have to process EU data within the block. And the consequences of the original ruling by the European Court of Justice could affect many more US technology companies.
“In reality, Facebook would have to split its service into a European and a US service,” Schrems told CNBC via email.
“The absolutely ‘necessary’ transfers (e.g. when a US user sends a message to an EU user) can still take place between these two systems. The rest must remain in Europe (or in another safe country). Obviously, Facebook will do everything possible to avoid that. “
According to Cillian Kieran, founder and CEO of data protection software start-up Ethyca, the move could “be a severe blow to Facebook’s revenue model,” which has more than 400 million monthly active users in Europe.
“The recent decision and the possible suspension of the flow of data from Facebook indicate serious challenges for other US companies to do international business, especially for companies with fewer resources than Facebook to control legal proceedings,” Kieran told CNBC.
Many US internet giants – including Apple and Google – have their European headquarters in Ireland. Ireland’s DPC is the leading data protection regulator for these companies.
“The news raises the need for US companies to meet global data protection standards, not just to gain user confidence in the marketplace, but – on a more fundamental level – to get their product into key markets in the first place can “said Kieran.
The European Data Protection Board – an independent European body that aims to ensure the consistent application of the data protection provisions of the GDPR in the EU – is expected to publish its final guidelines shortly on how companies can make the decision of the ECJ regarding international data transfer and cloud use and remote processing.