Privacy

More uncertainty over EU-U.S. data flows as Irish DPA warns on legality of model contract clauses

Comment

Another development in the slow unraveling of the legal regime governing EU-U.S. data flows: The Irish data protection agency has warned that one of the mechanisms currently being used by thousands of companies might not be legal.

Companies such as Facebook were forced to switch to alternative mechanisms to govern data transfers after the prior data transfer deal, Safe Harbor, was struck down last year.

The DPA said today it is referring so-called “model contract clauses” to the Irish High Court for referral on to the European Court of Justice (CJEU) — the latter being the same court that invalidated Safe Harbor on the grounds that it breached fundamental European data protection rights.

The original 2013 legal challenge that resulted in Safe Harbor being struck down was brought by European privacy campaigner Max Schrems, who had argued that the U.S. government’s mass surveillance programs — which NSA whistleblower Edward Snowden revealed to be mining data from consumer web services such as Facebook — invalidated the long-standing EU-U.S. data flow deal by contravening European data protection laws. The CJEU agreed.

After Safe Harbor’s strike down, model contract clauses were one of the mechanisms the European Commission pointed to as an extant alternative available to companies to switch to. The EC has also been negotiating a new EU-U.S. data transfer deal to replace Safe Harbor — although it is not clear whether that agreement, called Privacy Shield, will pass muster with the CJEU either.

Work on the Privacy Shield is ongoing, with only a draft deal on the table so far, leaving the alternative data flow mechanisms to pick up the slack. Meanwhile, Europe’s article WP29 group, the body made up of the heads of EU Member State DPAs, has signaled it is not satisfied with Privacy Shield in its current form. Schrems has also slammed it as flawed as Safe Harbor. So further murky waters lie ahead there.

The WP29 is also assessing the legality of the alternative data transfer mechanisms, including model clauses, but has previously said companies can use them in the interim, while work to agree the Privacy Shield continues. However given individual DPA action, such as the referral by the Irish authority today, those alternatives are looking to be on increasingly shaky ground.

TechCrunch understands a key concern over model clauses is a structural issue, given the lack of redress facilities for European citizens wanting to pursue claims in the U.S. against companies they believe have breached their European rights. That issue has also been one of the key negotiation areas for Privacy Shield.

The CJEU ruling also instructed National DPAs to seek a referral to the central European court in cases where they believe there are specific causes for concern, such as the structural issue with model clauses outlined above. Which likely explains the Irish DPA’s move in this case.

The Irish DPA has been investigating model clauses following another complaint filed by Schrems, who is clearly not about to pack up his law books and give up campaigning for European data rights.

In a statement provided to TechCrunch about the referral, the Irish DPA said:

We continue to thoroughly and diligently investigate Mr Schrems’ complaint to ensure the adequate protection of personal data. We yesterday informed Mr Schrems and Facebook of our intention to seek declaratory relief in the Irish High Court and a referral to the CJEU to determine the legal status of data transfers under Standard Contractual Clauses. We will update all relevant parties as our investigation continues.

In a statement responding to the news of the Irish DPA’s action, Schrems added:

This is a very serious issue for the US tech industry and EU-US data flows. As long as far-reaching US surveillance laws apply to them, any legal basis will be subject to invalidation or limitations under EU fundamental right. I see no way that the CJEU can say that model contracts are valid if they killed Safe Harbor based on the existence of these US surveillance laws. All data protection lawyers knew that model contracts were a shaky thing, but it was so far the easiest and quickest solution they came up with. As long as the US does not substantially change its laws I don’t see now there could be a solution.

In a statement provided to TechCrunch, a Facebook spokesperson had this to say:

Thousands of companies transfer data across borders to serve their customers and users. The question the Irish DPC plans to raise with the court regarding Standard Contract Clauses will be relevant to many companies operating in Europe. While there is no immediate impact for people or businesses who use our services, we of course will continue to cooperate with the Irish Data Protection Commission in its investigation. Standard Contract Clauses remain valid, and Facebook has other legal methods in place to transfer data between countries.

Safe to say, uncertainty looks to be the new normal for businesses needing to transfer European citizens’ data to the U.S.

And with EU Member State DPAs now instructed to follow a set path of referring similar complaints to the CJEU, any quick fixes look set to rapidly run out of road. In short: buckle up for a bumpy ride.

More TechCrunch

Ahead of the AI safety summit kicking off in Seoul, South Korea later this week, its co-host the United Kingdom is expanding its own efforts in the field. The AI…

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

12 hours ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

3 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

3 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities