New European privacy regulations that took effect yesterday would force companies to be more attentive to how they handle customer data, while bringing consumers both new ways to control their data and tougher enforcement of existing privacy rights.
The EU General Data Protection Regulation (GDPR) replaces the bloc’s patchwork of rules dating back to 1995 and heralds an era where breaking privacy laws can fetch fines of up to 4 percent of global revenue or 20 million euros (US$23.43 million), whichever is higher, as opposed to a few hundred thousand euros.
Many privacy advocates around the world have hailed the new law as a model for personal data protection in the Internet era and called on other nations to follow the European model.
However, critics say the new rules are overly burdensome, especially for small businesses, while advertisers and publishers worry it will make it harder for them to find customers.
The GDPR clarifies and strengthens existing individual privacy rights, such as the right to have one’s data erased and the right to ask a company for a copy of one’s data. However, it also includes entirely new mandates, such as the right to transfer one’s data from one service provider to another and the right to restrict companies from using personal data.
Activists are already planning to leverage the right to access one’s data to turn the tables on large Internet platforms whose business model relies on processing people’s personal information.
That means companies are having to put in place processes for dealing with such requests and educating their workforce because any non-compliance could lead to stiff sanctions.
Studies suggest that many companies are not ready for the new rules.
As of yesterday, the International Association of Privacy Professionals found that only 40 percent of companies affected by the GDPR expected to be fully compliant.
It is unclear how many provisions of GDPR will be interpreted and enforced. A patchwork of European regulatory authorities, many of whom say they are underfunded, are to oversee the new law, with a central body to resolve conflicts.
One key provision of GDPR, the right to data portability, is causing particular confusion. Lawyers and experts say it is not clear how far the right for individuals to move their data from one service provider to another will stretch.
For example, music streaming services like Spotify AB create playlists for users based on their music preferences. While a user seeking to exercise the data portability right would be able to move playlists he or she created, the situation becomes fuzzy if the playlists are created by the streaming service using algorithms.
EU data protection authorities said individuals should be able to transfer data provided by them, but not “derived data” created by the service provider, such as algorithmic results.
Tanguy Van Overstraeten of Linklaters LLP said the data portability right could raise issues of intellectual property.
“It’s not obvious that you can necessarily migrate the data from your system to somebody else’s system,” he said.
On the business side, companies are rushing to renegotiate contracts with suppliers and service providers because GDPR increases their liability if something goes wrong.
Under the current rules it is generally the company that determines the purposes of data collection that is directly liable for any breaches.
GDPR changes that and data processors that only process or store the data on behalf of their clients, for example cloud computing providers, will be directly liable for sanctions and could face lawsuits from individuals, and that needs to be reflected in contracts.
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