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GDPR forces companies to be more attentive to how they handle data

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Facebook chief Mark Zuckerberg testifying during a US House Committee on Energy and Commerce hearing on April 11. The social network, which has been rocked by disclosures about the hijacking of personal data on tens of millions of its users, said it would start implementing 'new privacy experiences' to comply with the EU's GDPR which became effective on May 25.

Brussels

NEW European privacy regulations that kicked in last week will 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 European Union 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 per cent of global revenue or 20 million euros (S$31.24 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 countries to follow the European model.

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Critics, though, say the new rules are overly burdensome, especially for small businesses, while advertisers and publishers worry they 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.

But 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.

Patrick Van Eecke, partner at law firm DLA Piper, said: "If you compare the GDPR with the data protection directive, you can really compare it with a piece of software upgrading from 1.0 to 2.0.

"It's a gradual, and not a revolutionary, kind of thing. But for many companies, it was a huge wake-up call because they never did their homework. They never took the data protection directive seriously."

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.

The International Association of Privacy Professionals found that only 40 per cent of companies affected by the GDPR expected to be fully compliant by May 25.

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 under-funded, will 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.

David Hoffman, director of security policy and global privacy officer at Intel, said: "I think the data portability rights are pretty significant and are going to take a while for people to figure out what the bounds of them are and how to go about complying with them."

For example, music streaming services like Spotify 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 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."

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 which only process or store the data on behalf of their clients, such as cloud computing providers, will be directly liable for sanctions and could face lawsuits from individuals, and that needs to be reflected in contracts.

Companies can have hundreds, thousands or tens of thousands of agreements which need to be revisited to ensure they comply with GDPR.

"After 20 years of data protection legislation in place, it's only now with the GDPR they (companies) start to think about 'what's my role in the whole story? Am I a data controller or data processor?'" said Mr Van Eecke. REUTERS

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