What the ECJ's Belgian data ruling means for tech giants like Facebook, Google

·3-min read
The entrance of the European Court of Justice is pictured in Luxembourg, January 26, 2017. Picture taken January 26, 2017. REUTERS/Francois Lenoir
The European Court of Justice's ruling could mean more sanctions for big tech. Photo: Reuters

The European Court of Justice (CJEU) has ruled that the data watchdogs of any EU member nations can take action against big tech firms like Apple (AAPL), Facebook (FB) and Google (GOOGL).

The ruling, which came on Tuesday as part of a long-running case between Belgian authorities and Facebook, is a blow to the social networking giant, which had sought to limit exposure to one over-arching regulation. Despite this, analysts said the ruling wouldn't have any major implications for Big Tech giants.

“Under certain conditions, a national supervisory authority may exercise its power to bring any alleged infringement of the EU’s General Data Protection Regulation (GDPR) before a court of a member state, even though that authority is not the lead supervisory authority with regard to that processing,” the CJEU said in a ruling on Tuesday.

The ruling relates to a case stretching back several years to when Belgium’s data protection watchdog wanted to stop Facebook for placing tracking cookies on user's browsers without consent.

Responding to the ruling, Jack Gilbert, associate general counsel at Facebook, told Yahoo Finance UK: "We are pleased that the CJEU has upheld the value and principles of the one-stop-shop mechanism, and highlighted its importance in ensuring the efficient and consistent application of GDPR across the EU.”

Facebook had argued that under EU GDPR rules only one national data protection authority has the power to handle cases involving data complaints — a system known as “one-stop shop.” GDPR gives regulators the power to fine companies as much as 4% of their annual sales.

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Many Big Tech companies have their European headquarters in Ireland. However, Ireland’s regulator has often been criticised for taking too long to act.

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Reuters quoted the European Consumer Organisation's director general Monique Goyens as saying: "Most big tech companies are based in Ireland, and it should not be up to that country’s authority alone to protect 500 million consumers in the EU, especially if it does not rise to the challenge.”

Ireland has defended itself by saying it needs to be extra diligent in dealing with powerful tech giants, the publication reported, as it described the ruling as "a blow to Facebook" and said tech giants could face more scrutiny and sanctions.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told Yahoo Finance UK the ruling was “another chip in the armour of Facebook" but was “unlikely to trip up the social network’s given its huge reach and power.”

“It may add to the regulatory pressure which facing Facebook, but it certainly isn’t its biggest headache and investors are likely to shrug off this latest development,” she said.

In her opinion, Big Tech's focus "will be trained much more intensely on five bills being put before US Congress aimed at limiting their power and could potentially lead to the break up monopolies."

Kaia Parv, head of investment research at broker Fxprimus, told Yahoo Finance UK: “Increased regulatory oversight and legislation are secular trends we are going to see on both sides of the Atlantic but also in countries such as Australia and also China."

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