The European Union’s highest court, the European Court of Justice, dealt a blow to the American tech industry yesterday when it struck down the international Safe Harbor agreement that previously allowed companies to move digital information between the EU and the U.S. The pact allowed companies to transfer data such as social media updates and online search histories. However, the court ruled that Safe Harbor was flawed since the U.S. government used it to access the online information of Europeans, an issue that was raised by NSA whistleblower Edward Snowden.

The court determined that Snowden’s leaks “made it clear that American intelligence agencies had almost unfettered access to the data, infringing on Europeans’ rights to privacy,” reports The New York Times.

“The court said data protection regulators in each of the European Union’s 28 countries should have oversight over how companies collect and use online information of their countries’ citizens.”

American tech companies such as Facebook and Google are facing scrutiny by European regulators that could have an impact on how they conduct future business around the world.

While data protection advocates support the court’s decision, tech industry leaders and trade groups are concerned that restricting the flow of data would adversely affect business efforts and online advertising.

“They called on the European Commission to complete a new safe harbor agreement with the United States, a deal that has been negotiated for more than two years and could limit the fallout from the court’s decision,” notes NYT. “Some European officials and many of the big technology companies, including Facebook and Microsoft, tried to play down the impact of the ruling.”

The decision reaches beyond the tech industry to impact any company with international operations. U.S. secretary of commerce Penny Pritzker says it, “puts at risk the thriving trans-Atlantic digital economy.” She plans to work with Europe to finalize the new agreement.