Europe and the U.S. finally agree a landmark data-sharing pact — and it’s already under threat
The Privacy Shield Framework logo is displayed on a smartphone screen.
Pavlo Gonchar | Sopa Images | Lightrocket | Getty Images
Businesses can continue transferring data from the European Union to the U.S. as normal after the two superpowers this week agreed a landmark data-sharing pact.
The framework, which replaces a previous agreement that was invalidated in 2020, is a major development with implications for U.S. tech giants, which rely on the pact to transfer data on their European users back to America.
Without it in place, these companies faced the risk of costly initiatives to process and store user data locally — or withdraw their business from the bloc altogether. So the agreement of the new rules will provide some relief to Meta and other U.S. companies which share gargantuan amounts of user data around the world.
However, the rules already face the threat of legal challenges from privacy activists, who are unhappy with the level of protection the measures offer European citizens. They say it isn’t that different from an earlier framework called Privacy Shield.
CNBC runs through all you need to know about the new EU-U.S. privacy framework, why it matters, and its chances of success.
What’s the new EU-U.S. Data Privacy Framework?
The new data-sharing pact, called the EU-U.S. Data Privacy Framework, aims to ensure that data can flow safely between the EU and U.S., without having to put in place additional data protection safeguards.
In a statement Monday, EU executive body the European Commission said it concluded that U.S. data protection laws offer an “adequate level of protection” for European citizens, and introduced new safeguards limiting access to EU data by U.S. intelligence services to only what is “necessary and proportionate.”
A new Data Protection Review Court will be established for Europeans to issue privacy complaints. It will have powers to order firms to delete users’ data if it finds the information collected was in breach of the new safeguards.
Why was a new data transfer agreement needed?
The Data Privacy Framework replaces a prior agreement, called Privacy Shield, which allowed companies to share data on Europeans to the U.S. for storage and processing locally in their domestic data centers.
This was struck down in July 2020, when the European Court of Justice, the EU’s top court, sided with Austrian privacy campaigner Max Schrems, who alleged U.S. law did not offer sufficient protection against surveillance by public authorities.
Schrems said that revelations from NSA whistleblower Edward Snowden about U.S. surveillance meant that American data protection standards couldn’t be trusted.
He raised a complaint against the social network Facebook which, like many other firms, was transferring his and other user data to the States, as well as the Irish Data Protection Commission, which is Facebook’s main regulatory authority when it comes to data privacy in Europe.
It reached the European Court of Justice, which in 2015 ruled that the then Safe Harbour Agreement, a previous mechanism for allowing European users’ data to be moved to the U.S., was not valid and did not adequately protect European citizens.
It was replaced with the Privacy Shield, however, this was subsequently scrapped too.
In the meantime, companies have relied on separate mechanisms known as Standard Contractual Clauses to ensure they can still move data across the Atlantic.
These tools, too, are under threat.
The Irish DPC in May ruled that Meta’s use of SCCs for transfers of personal data to the U.S. is in breach of the EU’s General Data Protection Regulation. The U.S. tech giant was fined a record $1.3 billion.
Why does it matter?
Multinational companies operate in various jurisdictions, and they need to move data on their customers across borders in a way that’s both secure and complies with data protection regulations.
U.S. tech giants share data on their European users back home all the time. It’s part and parcel of the internet being an open, interconnected platform.
But the way data is handled by these tech companies has come under heavy scrutiny by regulators and privacy campaigners.
Meta, Google, Amazon and others collect huge amounts of data on their users, which they use to inform their content recommendation algorithms and personalize ads.
There have also been countless examples of scandals surrounding the misuse of people’s data by tech firms — not least Meta’s improper sharing of data with Cambridge Analytica, the controversial political consulting firm.
Europe has tough regulations when it comes to processing internet users’ data.
In 2018, the General Data Protection Regulation, or GDPR, came into force introducing tough requirements for organizations to ensure they handle user data safely and securely. This is a law that applies across all the countries within the EU.
The U.S., on the other hand, does not have a singular federal data protection law in place that covers the privacy of all types of data.
Instead, individual U.S. states have come up with their own respective regulations for data privacy, with California leading the charge.
“There has been intense regulatory and political scrutiny on EU-U.S. data transfers, so there are notable differences in the U.S. law protections implemented to support the new framework,” Holger Lutz, partner at law firm Clifford Chance, told CNBC via email.
“Changes to U.S. law have been made in parallel to enhance protections for EU personal data and rights for EU citizens in connection with that data. Those protections are not limited to the new framework – they also protect EU-U.S. personal data transfers outside the framework, and can be taken into account when making such transfers based on other legal instruments such as the EU standard contractual clauses.”
Will it succeed?
The approval of a new data privacy framework means that businesses will now have certainty over how they can process data across borders going forward.
Had there not been an agreement, some companies may have been forced to close their operations in Europe. Indeed, Meta warned this was a risk in February 2022.
Still, obstacles lie ahead.
Schrems, the Austrian privacy activist who helped bring down Privacy Shield, has already said he plans to launch a legal challenge to rip up the new data-sharing pact.
In a statement, Schrems said his law firm Noyb has “various options for a challenge already in the drawer.”
“We currently expect this to be back at the Court of Justice by the beginning of next year,” Schrems said.
“The Court of Justice could then even suspend the new deal while it is reviewing the substance of it. For the sake of legal certainty and the rule of law we will then get an answer if the Commission’s tiny improvements were enough or not.”
Privacy activists say the measures are not sufficient as U.S. privacy laws do not extend protections to non-U.S. citizens, meaning people in the EU don’t have the same level of protection.
“Whether the framework is successful will be a matter of whether the European courts consider the protections for personal data in the US do enough to deliver essential equivalence to the EU protections,” Lutz of Clifford Chance told CNBC.
“Businesses will be carefully considering these potential challenges in their scenario planning.”
Formula One F1 – United States Grand Prix – Circuit of the Americas, Austin, Texas, U.S. – October 23, 2022 Tim Cook waves the chequered flag to the race winner Red Bull’s Max Verstappen
Mike Segar | Reuters
Apple had two major launches last month. They couldn’t have been more different.
First, Apple revealed some of the artificial intelligence advancements it had been working on in the past year when it released developer versions of its operating systems to muted applause at its annual developer’s conference, WWDC. Then, at the end of the month, Apple hit the red carpet as its first true blockbuster movie, “F1,” debuted to over $155 million — and glowing reviews — in its first weekend.
While “F1” was a victory lap for Apple, highlighting the strength of its long-term outlook, the growth of its services business and its ability to tap into culture, Wall Street’s reaction to the company’s AI announcements at WWDC suggest there’s some trouble underneath the hood.
“F1” showed Apple at its best — in particular, its ability to invest in new, long-term projects. When Apple TV+ launched in 2019, it had only a handful of original shows and one movie, a film festival darling called “Hala” that didn’t even share its box office revenue.
Despite Apple TV+ being written off as a costly side-project, Apple stuck with its plan over the years, expanding its staff and operation in Culver City, California. That allowed the company to build up Hollywood connections, especially for TV shows, and build an entertainment track record. Now, an Apple Original can lead the box office on a summer weekend, the prime season for blockbuster films.
The success of “F1” also highlights Apple’s significant marketing machine and ability to get big-name talent to appear with its leadership. Apple pulled out all the stops to market the movie, including using its Wallet app to send a push notification with a discount for tickets to the film. To promote “F1,” Cook appeared with movie star Brad Pitt at an Apple store in New York and posted a video with actual F1 racer Lewis Hamilton, who was one of the film’s producers.
(L-R) Brad Pitt, Lewis Hamilton, Tim Cook, and Damson Idris attend the World Premiere of “F1: The Movie” in Times Square on June 16, 2025 in New York City.
Jamie Mccarthy | Getty Images Entertainment | Getty Images
Although Apple services chief Eddy Cue said in a recent interview that Apple needs the its film business to be profitable to “continue to do great things,” “F1” isn’t just about the bottom line for the company.
Apple’s Hollywood productions are perhaps the most prominent face of the company’s services business, a profit engine that has been an investor favorite since the iPhone maker started highlighting the division in 2016.
Films will only ever be a small fraction of the services unit, which also includes payments, iCloud subscriptions, magazine bundles, Apple Music, game bundles, warranties, fees related to digital payments and ad sales. Plus, even the biggest box office smashes would be small on Apple’s scale — the company does over $1 billion in sales on average every day.
But movies are the only services component that can get celebrities like Pitt or George Clooney to appear next to an Apple logo — and the success of “F1” means that Apple could do more big popcorn films in the future.
“Nothing breeds success or inspires future investment like a current success,” said Comscore senior media analyst Paul Dergarabedian.
But if “F1” is a sign that Apple’s services business is in full throttle, the company’s AI struggles are a “check engine” light that won’t turn off.
Replacing Siri’s engine
At WWDC last month, Wall Street was eager to hear about the company’s plans for Apple Intelligence, its suite of AI features that it first revealed in 2024. Apple Intelligence, which is a key tenet of the company’s hardware products, had a rollout marred by delays and underwhelming features.
Apple spent most of WWDC going over smaller machine learning features, but did not reveal what investors and consumers increasingly want: A sophisticated Siri that can converse fluidly and get stuff done, like making a restaurant reservation. In the age of OpenAI’s ChatGPT, Anthropic’s Claude and Google’s Gemini, the expectation of AI assistants among consumers is growing beyond “Siri, how’s the weather?”
The company had previewed a significantly improved Siri in the summer of 2024, but earlier this year, those features were delayed to sometime in 2026. At WWDC, Apple didn’t offer any updates about the improved Siri beyond that the company was “continuing its work to deliver” the features in the “coming year.” Some observers reduced their expectations for Apple’s AI after the conference.
“Current expectations for Apple Intelligence to kickstart a super upgrade cycle are too high, in our view,” wrote Jefferies analysts this week.
Siri should be an example of how Apple’s ability to improve products and projects over the long-term makes it tough to compete with.
It beat nearly every other voice assistant to market when it first debuted on iPhones in 2011. Fourteen years later, Siri remains essentially the same one-off, rigid, question-and-answer system that struggles with open-ended questions and dates, even after the invention in recent years of sophisticated voice bots based on generative AI technology that can hold a conversation.
Apple’s strongest rivals, including Android parent Google, have done way more to integrate sophisticated AI assistants into their devices than Apple has. And Google doesn’t have the same reflex against collecting data and cloud processing as privacy-obsessed Apple.
Some analysts have said they believe Apple has a few years before the company’s lack of competitive AI features will start to show up in device sales, given the company’s large installed base and high customer loyalty. But Apple can’t get lapped before it re-enters the race, and its former design guru Jony Ive is now working on new hardware with OpenAI, ramping up the pressure in Cupertino.
“The three-year problem, which is within an investment time frame, is that Android is racing ahead,” Needham senior internet analyst Laura Martin said on CNBC this week.
Apple’s services success with projects like “F1” is an example of what the company can do when it sets clear goals in public and then executes them over extended time-frames.
Its AI strategy could use a similar long-term plan, as customers and investors wonder when Apple will fully embrace the technology that has captivated Silicon Valley.
Wall Street’s anxiety over Apple’s AI struggles was evident this week after Bloomberg reported that Apple was considering replacing Siri’s engine with Anthropic or OpenAI’s technology, as opposed to its own foundation models.
The move, if it were to happen, would contradict one of Apple’s most important strategies in the Cook era: Apple wants to own its core technologies, like the touchscreen, processor, modem and maps software, not buy them from suppliers.
Using external technology would be an admission that Apple Foundation Models aren’t good enough yet for what the company wants to do with Siri.
“They’ve fallen farther and farther behind, and they need to supercharge their generative AI efforts” Martin said. “They can’t do that internally.”
Apple might even pay billions for the use of Anthropic’s AI software, according to the Bloomberg report. If Apple were to pay for AI, it would be a reversal from current services deals, like the search deal with Alphabet where the Cupertino company gets paid $20 billion per year to push iPhone traffic to Google Search.
The company didn’t confirm the report and declined comment, but Wall Street welcomed the report and Apple shares rose.
In the world of AI in Silicon Valley, signing bonuses for the kinds of engineers that can develop new models can range up to $100 million, according to OpenAI CEO Sam Altman.
“I can’t see Apple doing that,” Martin said.
Earlier this week, Meta CEO Mark Zuckerberg sent a memo bragging about hiring 11 AI experts from companies such as OpenAI, Anthropic, and Google’s DeepMind. That came after Zuckerberg hired Scale AI CEO Alexandr Wang to lead a new AI division as part of a $14.3 billion deal.
Meta’s not the only company to spend hundreds of millions on AI celebrities to get them in the building. Google spent big to hire away the founders of Character.AI, Microsoft got its AI leader by striking a deal with Inflection and Amazon hired the executive team of Adept to bulk up its AI roster.
Apple, on the other hand, hasn’t announced any big AI hires in recent years. While Cook rubs shoulders with Pitt, the actual race may be passing Apple by.
Tesla CEO Elon Musk speaks alongside U.S. President Donald Trump to reporters in the Oval Office of the White House on May 30, 2025 in Washington, DC.
Kevin Dietsch | Getty Images
Tesla CEO Elon Musk, who bombarded President Donald Trump‘s signature spending bill for weeks, on Friday made his first comments since the legislation passed.
Musk backed a post on X by Sen. Rand Paul, R-Ky., who said the bill’s budget “explodes the deficit” and continues a pattern of “short-term politicking over long-term sustainability.”
The House of Representatives narrowly passed the One Big Beautiful Bill Act on Thursday, sending it to Trump to sign into law.
Paul and Musk have been vocal opponents of Trump’s tax and spending bill, and repeatedly called out the potential for the spending package to increase the national debt.
On Monday, Musk called it the “DEBT SLAVERY bill.”
The independent Congressional Budget Office has said the bill could add $3.4 trillion to the $36.2 trillion of U.S. debt over the next decade. The White House has labeled the agency as “partisan” and continuously refuted the CBO’s estimates.
The bill includes trillions of dollars in tax cuts, increased spending for immigration enforcement and large cuts to funding for Medicaid and other programs.
It also cuts tax credits and support for solar and wind energy and electric vehicles, a particularly sore spot for Musk, who has several companies that benefit from the programs.
“I took away his EV Mandate that forced everyone to buy Electric Cars that nobody else wanted (that he knew for months I was going to do!), and he just went CRAZY!” Trump wrote in a social media post in early June as the pair traded insults and threats.
Shares of Tesla plummeted as the feud intensified, with the company losing $152 billion in market cap on June 5 and putting the company below $1 trillion in value. The stock has largely rebounded since, but is still below where it was trading before the ruckus with Trump.
Tesla one-month stock chart.
— CNBC’s Kevin Breuninger and Erin Doherty contributed to this article.
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