European officials approved a new agreement on Tuesday that will allow some of the world’s largest companies, including Google and General Electric, to move digital information freely between the European Union and the United States.

The pact, known as the E.U.-U.S. Privacy Shield, comes after months of political wrangling. It is aimed at allowing online data — from social media posts and search queries to information about workers’ pensions and payroll — to be transferred across the Atlantic. The agreement also provides extra privacy protections for European citizens when their information is moved to the United States.

Here’s a primer on what was announced, what happens next and how it might affect you.

What is the Privacy Shield and why does it matter?

The pact allows more than 4,000 companies that have registered with the Department of Commerce to transfer data between Europe and the United States. The new deal became necessary after Europe’s highest court ruled last year that the previous one — known as Safe Harbor — was invalid because it did not sufficiently protect Europeans’ privacy rights.