EU bodies’ use of US cloud services from AWS, Microsoft being probed by bloc’s privacy chief

Europe’s lead data protection regulator has opened two investigations into EU institutions’ use of cloud services from U.S. cloud giants, Amazon and Microsoft, under so called Cloud II contracts inked earlier between European bodies, institutions and agencies and AWS and Microsoft.

A separate investigation has also been opened into the European Commission’s use of Microsoft Office 365 to assess compliance with earlier recommendations, the European Data Protection Supervisor (EDPS) said today.

Wojciech Wiewiórowski is probing the EU’s use of U.S. cloud services as part of a wider compliance strategy announced last October following a landmark ruling by the Court of Justice (CJEU) — aka, Schrems II — which struck down the EU-US Privacy Shield data transfer agreement and cast doubt upon the viability of alternative data transfer mechanisms in cases where EU users’ personal data is flowing to third countries where it may be at risk from mass surveillance regimes.

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In October, the EU’s chief privacy regulator asked the bloc’s institutions to report on their transfers of personal data to non-EU countries. This analysis confirmed that data is flowing to third countries, the EDPS said today. And that it’s flowing to the U.S. in particular — on account of EU bodies’ reliance on large cloud service providers (many of which are U.S.-based).

That’s hardly a surprise. But the next step could be very interesting as the EDPS wants to determine whether those historical contracts (which were signed before the Schrems II ruling) align with the CJEU judgement or not.

Indeed, the EDPS warned today that they may not — which could thus require EU bodies to find alternative cloud service providers in the future (most likely ones located within the EU, to avoid any legal uncertainty). So this investigation could be the start of a regulator-induced migration in the EU away from U.S. cloud giants.

Commenting in a statement, Wiewiórowski said: “Following the outcome of the reporting exercise by the EU institutions and bodies, we identified certain types of contracts that require particular attention and this is why we have decided to launch these two investigations. I am aware that the ‘Cloud II contracts’ were signed in early 2020 before the ‘Schrems II’ judgement and that both Amazon and Microsoft have announced new measures with the aim to align themselves with the judgement. Nevertheless, these announced measures may not be sufficient to ensure full compliance with EU data protection law and hence the need to investigate this properly.”

Amazon and Microsoft have been contacted with questions regarding any special measures they have applied to these Cloud II contracts with EU bodies.

The EDPS said it wants EU institutions to lead by example. And that looks important given how, despite a public warning from the European Data Protection Board (EDPB) last year — saying there would be no regulatory grace period for implementing the implications of the Schrems II judgement — there hasn’t been any major data transfer fireworks yet.

The most likely reason for that is a fair amount of head-in-the-sand reaction and/or superficial tweaks made to contracts in the hopes of meeting the legal bar (but which haven’t yet been tested by regulatory scrutiny).

Final guidance from the EDPB is also still pending, although the Board put out detailed advice last fall.

The CJEU ruling made it plain that EU law in this area cannot simply be ignored. So as the bloc’s data regulators start scrutinizing contracts that are taking data out of the EU some of these arrangement are, inevitably, going to be found wanting — and their associated data flows ordered to stop.

To wit: A long-running complaint against Facebook’s EU-US data transfers — filed by the eponymous Max Schrems, a long-time EU privacy campaigners and lawyer, all the way back in 2013 — is slowing winding toward just such a possibility.

Last fall, following the Schrems II ruling, the Irish regulator gave Facebook a preliminary order to stop moving Europeans’ data over the pond. Facebook sought to challenge that in the Irish courts but lost its attempt to block the proceeding earlier this month. So it could now face a suspension order within months.

How Facebook might respond is anyone’s guess but Schrems suggested to TechCrunch last summer that the company will ultimately need to federate its service, storing EU users’ data inside the EU.

The Schrems II ruling does generally look like it will be good news for EU-based cloud service providers which can position themselves to solve the legal uncertainty issue (even if they aren’t as competitively priced and/or scalable as the dominant US-based cloud giants).

Fixing U.S. surveillance law, meanwhile — so that it gets independent oversight and accessible redress mechanisms for non-citizens in order to no longer be considered a threat to EU people’s data, as the CJEU judges have repeatedly found — is certainly likely to take a lot longer than ‘months’. If indeed the US authorities can ever be convinced of the need to reform their approach.

Still, if EU regulators finally start taking action on Schrems II — by ordering high profile EU-US data transfers to stop — that might help concentrate US policymakers’ minds toward surveillance reform. Otherwise local storage may be the new future normal.