What does Safe Harbour mean for internet-based services in Europe?

Oct. 27, 2015 - PRLog -- There’s been a lot of talk lately about the Safe Harbour agreement, which allowed American companies to store the personal data of European citizens without any additional formalities regarding its safekeeping. The difference in the approach to privacy matters between the U.S. and Europe and how to handle the flow of information between them has been a source of growing legal and political problems since the beginning of the global era and the explosion of the internet.

The Safe Harbour agreement, confirmed by the European Commission in July of 2000 (2000/520/WE), was supposed to solve all of these issues. Every company based in the U.S. that provided a service involving the safekeeping of the personal data of citizens of the European Union had to sign on to the agreement, which lawmakers believed would ensure the safe and proper storage of the data. Safe Harbour had a particular significance for the operation of Saas services, where users entered their personal data into applications hosted on servers based in the U.S., like CRM and ERP systems and email communications platforms.

“Leaks about the quasi-legal use of data by the NSA had a massive impact on the trust in the safety that was guaranteed to EU citizens by Safe Harbour”, says Paul Sala, managing director of FreshMail, one of the leading email marketing providers in Europe.

The legal basis of the agreement has long been questioned by the European Parliament and European Commission. Only in September of this year were specific steps taken by the European Court of Justice to suspend its validity. On September 23, the court ruled that the safe storage of the personal information of EU citizens on U.S.-based servers was not sufficiently guaranteed by the rules currently in place.

What does this mean for the market for internet-based services in Europe? “The suspension of Safe Harbour has a huge impact on both American service providers and their European customers”, says Paul Sala of FreshMail. “Since the agreement is no longer in force, new legal provisions are necessary to fill the void so that the relevant authorities are able to guarantee the security of stored personal data. The dynamics of the business environment, where time is money, will not influence the pace of the formulation of a new agreement.”

This is worse news for the American service providers than for their European customers. It will likely result in the migration of data to firms based in Europe that offer equal functionalities to their American counterparts. Currently, each online business segment led by a U.S.-based firm has a strongly positioned European competitor that can easily comply with regulations to ensure the safe storage of data as defined by European law.

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