Microsoft Corp. warned that its cloud services could be a victim of the legal vacuum over transatlantic data transfers that’s already prompted Facebook owner Meta Platforms Inc. to threaten to pull out of the European Union.
(Bloomberg) — Microsoft Corp. warned that its cloud services could be a victim of the legal vacuum over transatlantic data transfers that’s already prompted Facebook owner Meta Platforms Inc. to threaten to pull out of the European Union.
Companies have been facing a legal limbo since 2020, when the EU’s top court banned an EU-US pact regulating such data flows, over fears that user data wasn’t safe from the prying eyes of security services once on US soil. An impending ban on alternative contractual clauses — in a test case involving Meta — is expected to make matters worse.
“The growth of our internet- and cloud-based services internationally relies increasingly on the movement of data across national boundaries” and the lack of a solution could “result in additional blockages of data transfers,” Microsoft said in its quarterly report this week.
EU regulators in December took a big step toward ending the uncertainty that imperiled transatlantic data flows worth billions of dollars, following months of negotiations with the US, which yielded an executive order by President Joe Biden and US pledges to ensure that EU citizens’ data is safe once it’s shipped across the Atlantic. But, the new pact still needs the approval by EU lawmakers and a panel of EU privacy watchdogs, which is expected at some point this year.
Read More: Meta, Google Face Data Doomsday as Key EU Decision Looms
The warning from Microsoft came as it reported quarterly profit and sales that topped projections, fueled by resilient corporate cloud-computing demand, and gave an upbeat outlook for its nascent artificial intelligence services.
Separately, Britain’s antitrust watchdog vetoed Microsoft’s acquisition of Activision Blizzard, citing concerns over cloud-based gaming.
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