...and now the advantage is political, not technical. This is a bad road to follow, EU bureaucracy is a destructive force.
Why? Well, because the agreement says so and because any legal proceedings would be in the US according to the agreement and enforced "primarily by the private sector". Because that makes sense right? Courts, lawyers and laws are so boring anyways...
This change means that EU countries can now question the claim and act if it's a lie. Since EU is moving to harmonize data storage laws among it's member countries there won't be any bureaucratic mess only a return of citizen rights.
[0] http://www.export.gov/safeharbor/eu/eg_main_018476.asp
[EDIT] Ah, yes, the data storage location thing. That's mainly a consequence of the NSA thingy. Thanks to that no US company can any longer fully claim that any data stored in the US can be kept private. It's kind of silly since everybody spies on everybody else but the US got caught.
It's a defensive force in this case.
Have people suddenly forgotten what happens with data in the US?
- a "value-add" or middleman opportunity on service provider side (think hosting companies differentiating themselves as compliant, like in discussed piece, or offers of "one stop EU compliance", and similar check-box ticking);
- more annoying popups for users ("this service is not available in your country", "click here to acknowledge you are outside EU", etc).
I am afraid that this EU law will not protect your data against those who made the laws.
US companies act fast a loose with personal data even when the US government is nowhere to be seen.
Forcing the data to be in the EU makes it much harder for the US govt to look at the data in bulk and non-obvious ways, as they now have to either backdoor remote systems or transmit data back, instead of just having their little machine in the datacenter.
Of course, EU will have their own little machine in the EU datacenter, but at least the intelligence gathering is then split (which helps protect EU companies from US companies - in case you did not notice and you're born yesterday, companies govern the world, not the government per se.)
Now to implement user-side and end to end crypto in everything regardless..
So even inside the EU there's not a safe harbor as you don't know the percentage and the filters in place, the secret interpretation of laws, and cooperation, infiltration and hacking into the main exchanges and cables.
It's this lack of legal process which means that the safe harbor agreement did not provide equivalent protections required by the charter, without even considering the spying angle.