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What The EU Privacy Ruling Means For SMBs

The European Union’s decision to change transatlantic personal data sharing rules might seriously affect American businesses with operations in Europe and data centers in mainland United States.

U.S. companies are calling for a quick fix to a 15-year-old deal struck down by an EU court, which allowed European and American companies to seamlessly transfer personal data between the two continents, Reuters reported.

The decision essentially kills the Safe Harbor framework that was mutually agreed upon by the U.S. and Europe and is used by over 4,400 companies, including Facebook and Google. The framework reportedly allowed American companies to handle data on Europeans and gave them permission to move their data back and forth across the Atlantic Ocean.

“The biggest fear is they’ll lose the opportunity to provide data services in Europe,” said Emery Simon, counselor to BSA | The Software Alliance, a consulting firm that works with companies like Oracle and IBM.

And while companies the size of IBM have the legal resources and infrastructure to work around the mandate, it would be the small and mid-sized American businesses that will be hit the hardest.

The whole commotion behind the EU striking down the deal boils down to the European Union’s reluctance to let American companies store data of Europeans on servers which are accessible to the U.S. government.

“Any U.S. company with employees or customers in Europe is potentially impacted by this ruling,” RetailMeNot spokesman Brian Hoyt told Reuters. “We also believe it may also create challenges for data sharing necessary to rapidly provide data analysis for business operations.”

Hoyt’s argument about rapid data analysis also highlights the fact that using data centers in Europe wouldn’t be the key solution to the problem, as companies need more than just raw data to run their day-to-day business.

“You can’t isolate the flow of data only within one territory or jurisdiction,” Symantec Senior Director for Goverment Affairs in Europe Ilias Chantzos told Reuters.

Thomas Boue, director of EMEA government affairs at BSA, seems to agree. Data storage without processing is not going to be everything. “For companies, a lot of the added value is on all the tools they use to process the data, what you do with that data,” he said.

However, for companies like Facebook, the latest privacy rulings don’t really mean anything, as all European users accept the company’s terms and conditions, which gives Facebook permission to store their data in the U.S.

While the EU and the American government work out another deal, European data companies are expected to see better business come their way as many SMBs don’t have the motivation or resources to fight the law.

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