The European Court of Justice has ruled that data transferred from the EU to other areas of the world under the Safe Harbour agreement is not being sufficiently protected.
The case was brought to attention by Max Schrems who argued that the US does not provide adequate protection against the surveillance of data being transferred through from the EU.
The ruling invalidates the Safe Harbour agreement, which has been under scrutiny since the Edward Snowden leaks.
The European Court of Justice said the Safe Harbour Scheme "enables interference, founded on national security and public interest requirements or on domestic legislation of the United States, with the fundamental rights of the persons whose personal data is or could be transferred from the European Union to the United States."
Online privacy has become a huge concern around the world and the new ruling will be a big blow to US tech companies such as Facebook and Twitter who have a huge presence in Europe.
Download our Safe Harbour guide.