Marketers Should Care About Latest Transatlantic Data Deal

The constant tug-of-war between the U.S. big tech companies and European regulators over cross-border data transfer has led to some extreme claims in recent weeks. While the eventual outcome may not be as drastic as Meta having to pull its services in Europe, marketers should still be clued up about the latest transatlantic data deal. Here’s what you need to know. What happened to the existing data-sharing framework? A little more than a year ago, EU regulators invalidated the cross-border data transfer framework, Privacy Shield, for fear of U.S. standards not meeting those in Europe. As a result, thousands of mainly small and medium-sized firms could no longer transfer personal data across the Atlantic, unless they complied with the Standard Contractual Clauses (SCCs). Meta, Twitter Detail Safety Measures Regarding Russia’s Invasion of Ukraine But SCCs aren’t a substitute for Privacy Shield. With Privacy Shield, the U.S agencies had access to personal data transferred out of the EU, but EU citizens had no right to access or correct this data, which did not align with the GDPR standards. With SSC, it's more regulated. A set of non-negotiable pre-written clauses and conditions are agreed upon and adhered to by both, the sender and receiver, of personal data. Ok, so what's the main concern? The core issue in question here is the lack of a real framework in the U.S that ensures the data safety of European residents. EU regulators are worried that once the data gets transferred into the U.S, it is nearly impossible to guarantee that the U.S government will not access it. “[EU] regulators are going after large companies in the U.S. so that the regulators here start to build some parity,” said Mandar Shinde, CEO of customer data platform Blotout. The prominent challenge is upholding privacy as a global entity across borders. A data cut-off between the regions also cuts off U.S. companies trying to target EU audiences, missing out on millions of potential customers and ultimately resulting in revenue loss. “The cost of advertising essentially will be felt by the local players in Europe because their cost of acquisition is going to go through the roof,” said Shinde. Why is this an issue now? Last week, Ireland’s Data Protection Commission (DPC) reached a preliminary decision that could potentially suspend Facebook’s data sharing between the EU and the U.S., which is necessary for the platform to benefit from the data-driven business, strengthen trade and increase consumer access to digitally-enabled goods and services. “Suspending data transfers would be damaging not only to the millions of people, charities and businesses in the EU who use our services but also to thousands of other companies who rely on EU-U.S. data transfers to provide a global service,” a Meta spokesperson told Adweek. “A long-term solution on EU-U.S. data transfers is needed to keep people, businesses and economies connected.” Meta wouldn't share what the draft entails. Adding to the urgency, European Commissioner Margrethe Vestager said that agreeing on a new data transfer agreement with the U.S. is a “high priority” for the EU, but that it would not be easy. Nonetheless, the outcome of the Irish DPC's case will be based on ongoing conversations where all the parties, including the U.S. government, will weigh in. Then, the Irish DPC will produce a final draft decision for consultation with the Data Protection Authorities in Europe. “The idea that Facebook gets shut down doesn't seem plausible,” said Matthew Boulos, COO of Blotout. Although it is unlikely that the European regulators will allow the tech firm to revert to the previous data frameworks, he added. Shinde, however, preempts potential fines levied on Facebook. Outside of Meta, earlier this month Google faced a similar pushback with its product Google Analytics over data spying concerns in the U.S. by French watchdogs. To which, Google called for a new agreement to allow data transfer and potentially store more data in the EU. What is the long-term solution? Privacy experts and analysts agree that policy intervention is the long-term solution. The U.S and EU are in an ongoing conversation to set up a treaty that allows data transfer and “there is a decent chance of Privacy Shield 2.0 between now and end of summer,” said Alan Chapell, lead privacy counsel for the data transformation company Eyeota. But, timing is everything. “We have a fractured political environment right now,” said David Blaszkowsky, head, data governance and regulatory affairs at Helios Data. Amid these discussions, there is a strong impetus for marketers and businesses to diversify their ad spend and audience acquisition platforms. What will happen next? One outcome is Facebook may partition its information into geographical flows by setting up different regional headquarters in Europe "to EU to ensure no data is lost,” said Shinde. Otherwise, the impact will be “colossal, both on the consumer and the business end,” gutting effectively a huge portion of the small business economy that rely on Facebook for targeting ads.

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Why Marketers Should Care About The Latest Transatlantic Data Deal

Some expect a Privacy Shield 2.0 by the end of summer

What happened to the existing data-sharing framework?

Trishla Ostwal

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Trishla Ostwal