Picture: ISTOCK
Picture: ISTOCK

Brussels — New European privacy regulations that go into effect on Friday 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 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 attract fines of up to 4% of global revenue or €20m, 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. Critics, though, 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.

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.

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.

"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," said Patrick Van Eecke, partner at law firm DLA Piper. "It’s a gradual and not a revolutionary kind of thing ... However, 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. This 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% of companies affected by the GDPR expected to be fully compliant by May 25.

Right to data portability

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.

"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," said David Hoffman, director of security policy and global privacy officer at Intel.

For example, music streaming services such as 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 they 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 lawyers 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."

Increased liability

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 directly liable for any breaches. GDPR changes that, and data processors which 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.

Companies can have hundreds, thousands or tens of thousands of agreements which need to be revisited to ensure they comply with GDPR. Said Van Eecke: "After 20 years of data protection legislation in place, it’s only now with the GDPR that [companies] start to think about ‘What’s my role in the whole story? Am I a data controller or data processor?’"