The EU Puts the Pain on Big Tech

Today was a rough day for big tech as the European Union made a decision that would put a bottleneck on big data. While Facebook ended the day in the red, Apple, Microsoft, and Alphabet (Google) all struggled to stay above the green line today. Below, we’ll talk about the issue for big tech that’s coming out of the EU as well as what today’s news means for the tech industry moving forward. So, let’s get right to it…

The European Union Ruling That Shook Tech

Today, a ruling from the highest court in the European Union was everything that tech companies involved in data sharing and their investors didn’t want to to hear. The ruling today took on what is called the “Safe Harbor” pact. The pact is a transatlantic data sharing agreement that was originally put into action in 2000. The ruling from the European Union made it so that European regulators have the ability to overturn this pact. The reason for the ruling is relatively simple. The courts found that the pact did nothing to protect the privacy of European consumer data when it was stored within United States data centers.

The case all started against Facebook. An Austrian law student and privacy activist by the name of Max Schrems took on the tech giant Facebook because he believes the company hands customer information over to United States Spies. The case was started in the midst of the Edward Snowden leaks that showed mass data collection and surveillance by the NSA. In terms of Facebook, the issue really comes down to digital advertising. While the digital advertising industry was still being born in the year 2000 when the Safe Harbor pact was signed, that industry has grown up quite a bit; losing sight of the importance of computer privacy in the process.

What This Means For Big Tech Companies

While the implications of today’s EU ruling are still unknown, it’s clear that this isn’t a good thing for the world of big tech. After all, big tech is filled with companies that have an unending hunger for data and data sharing. One thing we do know is that this ruling is going to cause major changes in the world of tech. When you think about how important EU consumers are to the industry, it’s clear to see why. After all, Facebook has 311 million users in Europe, a far larger audience than the 213 million user strong audience it has in the United States.

Essentially, as a result of the ruling, American companies will possibly be forced to adopt more conservative data sharing strategies at the snap of a finger. If these companies decide to ignore requests to adopt the conservative data sharing strategies, these companies will likely be investigated by European regulators. Of course, if European regulators find that these companies are breaking European law, the companies will face punishment.

What We Can Expect From Tech Stocks Moving Forward

There’s one thing that’s for sure, uncertainty! The bottom line is that the ruling was just passed down today. It will take time to see what kind of effect this will have on tech stocks. However, investors don’t like uncertainty. So, I’m expecting more volatile actions in the tech space. While we’re likely to see major positive spikes from big tech, we’re also likely to see major declines. At the end of the day, I’m expecting companies like Microsoft, Amazon, Facebook, Google and others to show either flat trends or downtrends until more information becomes available with regard to how the ruling will effect the industry.

What Do You Think?

What do you think the EU ruling means for big tech? Let us know in the comments below!

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