The European Union's top court ruled Thursday that an agreement that allows big tech companies to transfer data to the United States is invalid, and that national regulators need to take tougher action to protect the privacy of users' data.
The ruling does not mean an immediate halt to all data transfers outside the EU, as there is another legal mechanism that some companies can use.
But it means that the scrutiny over data transfers will be ramped up and that the EU and United States may have to find a new system that guarantees that Europeans' data is afforded the same privacy protection in the United States as it is in the European Union.
The case began after former US National Security Agency contractor Edward Snowden revealed in 2013 that the American government was snooping on people's online data and communications. The revelations included detail on how Facebook gave US security agencies access to the personal data of Europeans.
Austrian activist and law student Max Schrems that year filed a complaint against Facebook, which has its EU base in Ireland, arguing that personal data should not be sent to the US, as many companies do, because the data protection is not as strong as in Europe.
The EU has some of the toughest data privacy rules under a system known as GDPR, General Data Protection Regulation.