U.S. Firms Brace For EU Ruling That Could Change The Way They Do Business

This year has been a difficult one for U.S. tech firms operating in Europe. The eurozone has been working on a massive digital overhaul that will unite the rules governing e-commerce throughout the bloc.

However, that process has put many U.S. firms under the microscope as the region evaluates things like how they pay taxes and whether or not they abide by anti-competition laws. One overarching problem that U.S. firms are facing is Europeans' privacy concerns.

After NSA contractor Edward Snowden revealed that the U.S. government had been spying on its citizens without their knowledge, the tech sector was hit hard with data protection questions.

Now such concerns are at the heart of a ruling regarding Facebook Inc (NASDAQ: FB)'s data collection tactics.

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Privacy Concerns

Years ago, an Austrian law student questioned whether Facebook's data storage tactics were legal in the EU. The student, Max Schrems, asked the Irish data protection commissioner to evaluate whether or not the social media site's practice of storing user data in the United States was legal under EU privacy laws.

The commissioner said that the practice was allowed, as U.S. privacy safeguards are considered sufficient under EU law. However, Schrems appealed that decision in 2013 following Snowden's revelations.

Revisiting The Case

On Wednesday, an adviser to the European Court of Justice is expected to issue an opinion on the case, and it could have far-reaching consequences for U.S. tech firms operating in the EU.

While the case won't be decided by that opinion, the courts generally tend to fall in line with such recommendations. Facebook won't be the only firm to suffer the consequences of a ruling in favor of Schrems either-- companies like Google Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), Microsoft Corporation (NASDAQ: MSFT) and Apple Inc. (NASDAQ: AAPL) would all have to change the way they collect user data in order to comply with new rules.

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