The U.S. and the European Union have reached a preliminary agreement to allow transatlantic data transfers, President Joe Biden and European Commission President Ursula von der Leyen announced today in a joint press statement. 

Many tech firms store the data of their EU-based users in U.S. data centers. Until about two years ago, the practice of moving the data of EU users to the U.S. was governed by a framework called Privacy Shield. In 2020, the EU’s top court struck down Privacy Shield over concerns about U.S. surveillance. 

The 2020 court decision cast doubt on whether major tech firms could continue to transfer user data from the EU to their U.S. data centers. Meta Platforms Inc., for example, relies on user data to power its core advertising business, which generates the bulk of the company’s revenue. Last month, Meta warned that it may have to stop operating Facebook and Instagram in the EU because of legal uncertainty over whether it can continue moving information to U.S. data centers. 

Thousands of other companies are also believed to be affected by the 2020 EU court ruling that struck down the Privacy Shield framework. One of them is Google LLC. Since Privacy Shield was struck down, the company’s Google Analytics service has faced scrutiny from multiple regulatory agencies in the EU over the fact that it transfers data to the U.S.

The preliminary agreement announced today aims to provide a way for companies to continue transferring data from the EU to the U.S.

“This framework underscores our shared commitment to privacy, to data protection, and to the rule of law,” Biden said in today’s joint press statement. “And it’s going to allow the European Commission to once again authorize transatlantic data flows that help facilitate $7.1 trillion in economic relationships with the EU.”

“This will enable predictable and trustworthy data flows between the EU and US, safeguarding privacy and civil liberties,” von der Leyen added.

Major tech firms have welcomed the preliminary agreement. The Computer & Communications Industry Association, which represents companies such as Apple Inc., told the Wall Street Journal in a statement that the agreement should “restore legal certainty for thousands of businesses that routinely transfer commercial data between the EU and U.S.”

Meta also cheered the news. “With concern growing about the global internet fragmenting, this agreement will help keep people connected and services running,” said Nick Clegg, Meta’s vice president of global affairs. 

Kent Walker, Google’s president of global affairs, stated that “we commend the work done by the European Commission and U.S. government to agree on a new EU-U.S. framework and safeguard transatlantic data transfers.”

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