Privacy compliance laws: Why the European Commission finally got it right

The debate about privacy compliance has always been a heated one. Add to the mix new European Commission legislation and you have a recipe for not only a lively debate but also a controversy about the interference in privacy of a European bureaucracy.

The recent European Commission cookie law guidelines not only reignited controversy about privacy compliance in Europe and prompted furious debates in the trade press, quality press and tabloids, but also ignited considerable international interest.

This article concentrates on examining the stances which have been taken, their validity and, more importantly, what an enterprise needs to be doing as it turns from merely talking shop to setting and implementing concrete policies on privacy.

What tended to be ignored in the early days of the European Commission’s proposals was that the cookies rule was just a small part of a law aimed at safeguarding privacy online and an attempt to protect Internet users from an increasingly aggressive, intrusive and pervasive corporate marketing machine. These are real concerns which have been growing for a number of years and which the European Commission sought to address in its rulings.

It is ironic that the European Commission takes considerable flak for “creating’ initiatives when usually it is responding to pressure from below. It was the relative failure of the European Commission’s 2003 directive that led to the cookie law.

As international competition begins to heat up and the rapidly emerging markets of India, China and Brazil force companies into become more aggressive in their search for international markets, organisations providing content and obtaining information about users are utilising even more sophisticated and invasive techniques which many people are becoming alarmed about.

The ultimate aim is to protect user privacy to ensure that consent is given for all Internet marketing and a tidal wave of spam is averted. This is a laudable aim and one which should be supported. It should also be pointed out that these are merely a set of proposals—albeit a fairly comprehensive set—of reforms to the EU’s 1995 data protection rules to “-¦strengthen online privacy rights and boost Europe’s digital economy,” according to the EU’s web site.

The site adds, “Technological progress and globalisation have profoundly changed the way our data is collected, accessed and used. In addition, the 27 EU Member States have implemented the 1995 rules differently, resulting in divergences in enforcement. A single law will do away with the current fragmentation and costly administrative burdens, leading to savings for businesses of around €2.3 billion a year. The initiative will help reinforce consumer confidence in online services, providing a much needed boost to growth, jobs and innovation in Europe.”

EU Justice Commissioner Viviane Reding, the Commission’s Vice President, said, “Seventeen years ago, less than 1% of Europeans used the Internet. Today, vast amounts of personal data are transferred and exchanged, across continents and around the globe in fractions of seconds. The protection of personal data is a fundamental right for all Europeans, but citizens do not always feel in full control of their personal data.”

“My proposals will help build trust in online services because people will be better informed about their rights and in more control of their information. The reform will accomplish this while making life easier and less costly for businesses. A strong, clear and uniform legal framework at EU level will help to unleash the potential of the Digital Single Market and foster economic growth, innovation and job creation,” she added.

Key changes in the reform include:

• A single set of rules on data protection, valid across the EU. Unnecessary administrative requirements, such as notification requirements for companies, will be removed. This will save businesses around €2.3 billion a year.
• Instead of the current obligation of all companies to notify all data protection activities to data protection supervisors—a requirement that has led to unnecessary paperwork and costs businesses €130 million per year—the regulation provides for increased responsibility and accountability for those processing personal data.
• Companies and organisations must notify the national supervisory authority of serious data breaches as soon as possible (if feasible within 24 hours).
• Organisations will only have to deal with a single national data protection authority in the EU country where they have their main establishment. Likewise, people can refer to the data protection authority in their country, even when their data is processed by a company based outside the EU. Wherever consent is required for data to be processed, it is clarified that it has to be given explicitly, rather than assumed.

• People will have easier access to their own data and be able to transfer personal data from one service provider to another more easily (right to data portability). This will improve competition among services.
• A “right to be forgotten’ will help people better manage data protection risks online: people will be able to delete their data if there are no legitimate grounds for retaining it.
• EU rules must apply if personal data is handled abroad by companies that are active in the EU market and offer their services to EU citizens.
• Independent national data protection authorities will be strengthened so they can better enforce the EU rules at home. They will be empowered to fine companies that violate EU data protection rules. This can lead to penalties of up to €1 million or up to 2 percent of the global annual turnover of a company.
• A new Directive will apply general data protection principles and rules for police and judicial cooperation in criminal matters. The rules will apply to both domestic and cross-border transfers of data.

As companies such as British Airways announce that they are going to search for details of their regular customers on Google in order to provide a better service, it becomes increasingly obvious that data privacy is becoming more important than ever.

There are some factors which are critical to handling privacy in an effective and efficient manner. The most important one, and a factor which is often forgotten in many IT security implementations, is rock-solid commitment from senior management at board level.

If the senior management team members are not aware of or concerned about the privacy of the enterprise’s customers or employees, they will not make available resources in terms of staff and the necessary budgets to handle privacy in a professional manner.

At companies such as RSA Security and Sony, a lack of leadership on these issues from the top contributed to catastrophic laxity in IT security measures further down the line of junior management. It is very much the case that the tone has to be set from the top.

If IT security professionals are unsure if they can obtain senior management buy-in for a project, they seriously need to take stock of their own position, the position of IT security within the company and whether their senior management is taking IT security seriously.

The same importance must be given to the other stakeholders with roles and responsibilities around IT security. There has to be proper coordination of these individuals, but more importantly, they have to know that everyone has a role to play in data privacy.

This will include the Council, information technology generally, human resources, applications, business unit leaders, security (corporate, IT, physical and executive protection) and internal audit.

A major issue facing many privacy coordinators is the diversity of all types of privacy legislation and regulations, particularly when working in multinational environments. Sometimes in these environments, there are even conflicting privacy rules and requirements which make it difficult to select on privacy solution.