Dear Europe Digest reader, I hope this finds you well and that you are buckled up because things are about to get bumpy. Will the future EU-U.S. Data Privacy Framework be enough to save transatlantic data transfers? Meta is not sure if its report on quarterly results is to be believed.
"We expect (Ireland's Data Protection Commission) to issue a decision in May in its previously disclosed inquiry relating to transatlantic data transfers of Facebook EU/EEA user data, including a suspension order for such transfers and a fine," its said. "We will also evaluate whether and to what extent the IDPC decision could otherwise impact our data processing operations even after a new data privacy framework is in force."
My colleague, IAPP Staff Writer Joe Duball, broke the news 26 April.
Regardless of whether one is an avid user of Meta products or not, the DPC decision expected 12 May could be earth shattering on many levels. I am obviously not privy to the decision itself or to Facebook and Meta's data transfer and processing architecture.
Until we see the actual decision, we can still play with conjectures about the impact — for any company transferring data to the U.S. — of a data transfer suspension order or a potential requirement to delete EU data that has been previously transferred to and is currently stored in the U.S. Potential impacts could include:
- Disrupted access to the service for, in this case, millions of individuals and businesses using it daily in Europe.
- Lengthy and costly legal disputes to challenge the regulator's order, adding reputational damage and potential distrust from investors, among many other implications.
- Commercial consequences ranging from potential breaches of contractual agreements with customers and business partners, to cybersecurity concerns impacting a company's ability to conduct threat monitoring and prevention, to concerns impacting European employer's abilities to process payroll and social benefits, for instance
- A broader questioning of nondomestic solutions providers' approaches to data transfers, and a surge in EU/EEA localization and data residency solutions by stakeholders losing faith in the world's ability to come to terms with transatlantic data transfers.
This list may be overly dramatic, and these conjectures could be way off base. Many in the community hope the DPF will soon be the robust and much-needed successor to the Privacy Shield and will lessen the effective impact of the DPC decision. It most certainly would at a political level, and for the more than 5,000 organizations that, at one point, relied on Privacy Shield and may turn to the DPF once it is vetted by EU member states.
But where would the wave, in fact, stop? The EU has granted adequacy decisions to only a dozen jurisdictions, not to mention some have limited geographical or sectoral scope. The list includes important EU trading partners such as the U.K. Some significant ones, from a purely trade economics perspective, are not on that list. For instance, China and Russia, which collectively represented 21% of the EU's exports in 2021, are not included, setting aside an otherwise fascinating discussion on the merits of granting them adequacy. This means another legal transfer mechanism is still required for over 160 countries. So, the DPC decision will be consequential well beyond Facebook for the fate of standard contractual clauses and data transfers.
