New EU Data Protection Regulation will drive internet businesses 'out of Europe'
Digital business organisation IAB Europe warns that 'blunt and indiscriminate' regulation threatens 'data-driven advertising' in Europe
An organisation representing digital and online businesses in the European Union has warned that the EU Data Protection Regulation, agreed by government ministers yesterday, threatens online businesses and will drive internet businesses out of Europe.
The warning comes from IAB Europe, which describes itself as "the voice of digital business and the leading European-level industry association for the digital advertising ecosystem".
It claims that the regulation, which was signed off by ministers on a "general approach" basis on Monday after three years of wrangling, will affect the online advertising industry in particular and push more European internet businesses over to the US.
The text of the regulation will now be negotiated with the European Parliament and the European Commission to agree the final, precise law - this is particularly important as it will apply directly to the legal systems of the EU's member states, unlike the directive approach, in which national parliaments vote on their own interpretations of the directive into respective legal systems.
IAB Europe claims that there are three main causes of concern with the new regulation.
First, it says, the regulation is likely to place "additional restrictions on companies' ability to process data, making the new rules more restrictive than those now in force". For example, it adds, "several provisions of the text, taken together, may outlaw the processing of aggregated customer data that provides advertisers crucial information about the effectiveness of their ads". This, it says, will turn back the clock - not help to adapt EU rules to the internet age.
Second, the new regulation will expose companies to the risk of punitive fines in even inadvertent breaches of the rules, including for data processing that causes no meaningful privacy risk to users, or for cloud computing companies that simply provide the platform for others to run their organisations.
Finally, the idea of the 'one-stop shop' principle that was the centrepiece of the original proposal, which meant that instead of dealing with 28 different national privacy regulations, organisations would be able to work with just a single data protection authority, has been ditched.
"This one-stop shop would have increased efficiency and represented a major advance in Europe's quest to create a functioning digital single market. But today's text gives any 'concerned' authority the power to object to a decision taken by another national regulator," claimed IAB Europe.
"The current approach is blunt and indiscriminate - a far cry from the supposed objective of making EU rules fit for purpose in the internet age," said Townsend Feehan, CEO of IAB Europe. "The future regulatory framework needs to enable digital advertising to fund the informational, educational, entertainment and E-commerce services that European users enjoy online at little or no cost.
"That is not what is on the table right now. It is no exaggeration to say that a draconian regulation could drive small and medium-sized companies responsible for much of the innovation we see in the industry today out of Europe.
"Users do need transparency and choice about the processing of their data online, including for advertising," said Feehan.
"A data protection regime that is more constraining than the current law, dating from 1995, would undermine Europe's ability to benefit from the digital revolution, and needlessly handicap dynamic EU-based SMEs that are trying to compete in the global marketplace," concluded the organisation.
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