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(FILES) In this file photo taken on October 23, 2019, a giant digital sign is seen at Facebook’s corporate headquarters campus in Menlo Park, California.
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Thousands of companies will face restrictions on storing information about European Union residents on U.S. servers, after the bloc’s top court ruled that such transfers exposed Europeans to American government surveillance without “actionable rights” to challenge it.
The surprise ruling Thursday from the European Court of Justice, which invalidates a widely used EU-U.S. data-transfer agreement, is a victory for privacy activists who have long said that the U.S.’s surveillance practices should make it ineligible to store European data.
The decision will create legal headaches and potentially disrupt operations for thousands of multinational companies that do business in the U.S. and Europe. Depending on how it is applied, the ruling could force some of them—including tech giants like Facebook Inc. FB, +0.22%, Alphabet Inc GOOG, -0.45%. and Apple Inc. AAPL, +0.68% —to decide between a costly shift toward data centers into Europe or cutting off business with the region.
