The Privacy Shield System between the US and the EU: The Case for a Better Privacy Clause and a New Regulation for Big Tech
The United States will continue to spy on Europeans, but it will make sure that it is in line with the law. This was the reassurance that US President Joe Biden offered concerned citizens across the Atlantic today by signing an executive order designed to restart the easy flow of data between Europe and the US.
A system called Privacy Shield allowed 5000 businesses to send data back and forth across the Atlantic. Morgan Reed, president of the App Association, said that the pre-Schrems system worked. Thousands of companies were left in legal limbo after the EU court ruled that the Privacy Shield system was invalid.
Although the court decision did not stop transfers, it made them more complicated. “What the Schrems decision did was raise costs and concern for a lot of small companies that don’t have giant compliance departments’ and fleets’ worth of lawyers to do what are called standard contractual clauses,” says Reed. Standard contractual clauses are time-consuming data transfer agreements that force companies to take steps to assess whether they are safely moving data around the world.
Companies that have been wrestling with these clauses are pleased by the order and want to return to business as usual. The US and EU are working to reach a new privacy agreement. “We appreciate President Biden’s action to keep data flowing between the US and EU, underpinning one of our deepest and most mutually beneficial trading relationships,” says Matt Schruers, president of the Computer and Communications Industry Association (CCIA), a lobbying group that represents tech giants including Google, Amazon, and Apple.
There’s another way to ensure giant tech companies do not abuse their market power, say some antitrust experts and lawmakers. The largest American banks are classified as “systemically important financial institutions” by federal regulators and subject to more stringent scrutiny. And the big telecommunications corporations are designated “common carriers” with obligations to allow access to their networks to other companies. A similar approach could work for Big Tech, they say.
There is a lot of new rules being adopted in Congress. Senator Amy klobuchar of Minnesota said that it’s time to update competition laws for the digital era.
The Digital Platform Commission, introduced by Senator Michael Bennet, would be able to designate “systemically important digital platforms,” which would require additional oversight.
Britain has a different model that gives big tech companies more of a role in determining their commitments. The Digital Markets Unit was set up in order to develop a code of conduct for each company. Legislation that tells the non-discrimination rules and the enforcement duties of the digital markets unit are expected during the current session of parliament, because the new prime minister was a supporter of the regulatory concept as chancellor of the Exchequer.
Andy hopes to be Europe’s answer to Larry Page. The services offered by Proton are just with a privacy twist. All its products are encrypted. But unlike Google, nine-year-old Proton has had to try and grow its business in the shadow of the tech giants. That has been a huge disadvantage, says Yen, because companies like Google and Apple can exploit their dominance to nudge users to use their apps as well as their phones.
If a person buys a Google Android or Apple iPhone, they are offered a default email service, search engine, and calendar app. The companies themselves provide the services that lead to the defaults. He was well aware that people favor convenience. “What we know from studies is that 95 percent of people will not change the defaults.”
The European Union finally took action in 2022. In March, the bloc’s lawmakers agreed on new rules designed to release the grip Big Tech has on European consumers and to help homegrown internet companies compete with American giants for customers. The Digital Markets Act will obligate companies that run phone operating systems to offer “choice screens” so users have more control over which services they use. Technically, the DMA went into force in November, although it may not take full effect until March 2024. Proton is based in Switzerland and not in the EU. But Yen thinks this law will help European companies, like Proton, finally have a voice in Brussels.
Margrethe Vestager, the head of competition in the European Commission called me earlier this year. The political will to enforce this is there. The fire is visible inside her. She wanted to get it done.
Is there a problem of the big tech companies in Europe? A case of the German-speaking world and the Italian-speaking part of the problem
That’s the problem. The total market cap of these big tech companies was $7 trillion, which is larger than the GDP of most European countries.