WTF is GDPR?

WTF is GDPR?

Privacy experts suggest that the really big change here is around enforcement. More types of personal data that are hot to handle So what is personal data under GDPR? This means there’s a requirement on data controllers to minimize processing of personal data — limiting activity to only what’s necessary for a specific purpose, carrying out privacy impact assessments and maintaining up-to-date records to prove out their compliance. As the UK’s ICO tells it, consent under GDPR for processing personal data means offering individuals “genuine choice and control” (for sensitive personal data the law requires a higher standard still — of explicit consent). There are other legal bases for processing personal data under GDPR — such as contractual necessity; or compliance with a legal obligation under EU or Member State law; or for tasks carried out in the public interest — so it is not necessary to obtain consent in order to process someone’s personal data. Where the reason ends, the processing should, too.” The data protection officer (DPO) role that GDPR brings in as a requirement for many data handlers is intended to help them ensure compliance. GDPR also gives people who have consented to their data being processed the right to withdraw consent at any time. Only in instances where a data controller assesses that a breach is unlikely to result in a risk to the rights and freedoms of “natural persons” are they exempt from the breach disclosure requirement (though they still need to document the incident internally, and record their reason for not informing a DPA in a document that DPAs can always ask to see). If a data controller is using a data processor and it’s the processor that suffers a breach, they’re required to inform the controller as soon as they become aware. While profiling based on other types of personal data does not require obtaining consent from the individuals concerned, there is still a transparency requirement — which means service providers will need to inform users they are being profiled, and explain what it means for them.

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WTF is GDPR?
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European Union lawmakers proposed a comprehensive update to the bloc’s data protection and privacy rules in 2012.

Their aim: To take account of seismic shifts in the handling of information wrought by the rise of the digital economy in the years since the prior regime was penned — all the way back in 1995 when Yahoo was the cutting edge of online cool and cookies were still just tasty biscuits.

Here’s the EU’s executive body, the Commission, summing up the goal:

The objective of this new set of rules is to give citizens back control over of their personal data, and to simplify the regulatory environment for business. The data protection reform is a key enabler of the Digital Single Market which the Commission has prioritised. The reform will allow European citizens and businesses to fully benefit from the digital economy.

For an even shorter tl;dr the EC’s theory is that consumer trust is essential to fostering growth in the digital economy. And it thinks trust can be won by giving users of digital services more information and greater control over how their data is used. Which is — frankly speaking — a pretty refreshing idea when you consider the clandestine data brokering that pervades the tech industry. Mass surveillance isn’t just something governments do.

The General Data Protection Regulation (aka GDPR) was agreed after more than three years of negotiations between the EU’s various institutions.

It’s set to apply across the 28-Member State bloc as of May 25, 2018. That means EU countries are busy transposing it into national law via their own legislative updates (such as the UK’s new Data Protection Bill — yes, despite the fact the country is currently in the process of (br)exiting the EU, the government has nonetheless committed to implementing the regulation because it needs to keep EU-UK data flowing freely in the post-brexit future. Which gives an early indication of the pulling power of GDPR.

Meanwhile businesses operating in the EU are being bombarded with ads from a freshly energized cottage industry of ‘privacy consultants’ offering to help them get ready for the new regs — in exchange for a service fee. It’s definitely a good time to be a law firm specializing in data protection.

GDPR is a significant piece of legislation whose full impact will clearly take some time to shake out. In the meanwhile, here’s our guide to the major changes incoming and some potential impacts.

Data protection + teeth

A major point of note right off the bat is that GDPR does not merely apply to EU businesses; any entities processing the personal data of EU citizens need to comply. Facebook, for example — a US company that handles massive amounts of Europeans’ personal data — is going to have to rework multiple business processes to comply with the new rules. Indeed, it’s been working on this for a long time already.

Last year the company told us it had assembled “the largest cross functional team” in the history of its family of companies to support GDPR compliance — specifying this included “senior executives from all product teams, designers and user experience/testing executives, policy executives, legal executives and executives from each of the Facebook family of companies”.

“Dozens of people at Facebook Ireland are working full time on this effort,” it said, noting too that the data protection team at its European HQ (in Dublin, Ireland) would be growing by 250% in 2017. It also said it was in the process of hiring a “top quality data protection officer” — a position the company appears to still be taking applications for.

The new EU rules require organizations to appoint a data protection officer if they process sensitive data on a large scale (which Facebook very clearly does). Or are collecting info on many consumers — such as by performing online behavioral tracking. But, really, which online businesses aren’t doing that these days?

The extra-territorial scope of GDPR casts the European Union as a global pioneer in data protection — and some legal experts suggest the regulation will force privacy standards to rise outside the EU too.

Sure, some US companies might prefer to swallow the hassle and expense of fragmenting their data handling processes, and treating personal data obtained from different geographies differently, i.e. rather than streamlining everything under a GDPR compliant process. But doing so means managing multiple data regimes. And at very least runs the risk of bad PR if you’re outed as deliberately offering a lower privacy standard to your home users vs customers abroad.

Ultimately, it may be easier (and less risky) for businesses to treat GDPR as the new ‘gold standard’ for how they handle all personal data, regardless of where it comes from.

And while not every company harvests Facebook levels of personal data, almost every company harvests some personal data. So for those with customers in the EU GDPR cannot be ignored. At very least businesses will need to carry out a data audit to understand their risks and liabilities.

Privacy experts suggest that the really big change here is around enforcement. Because while the EU has had long established data protection standards and rules — and treats privacy as a fundamental right — its regulators have lacked the teeth to command compliance.

But now, under GDPR, financial penalties for data protection violations step up massively.

The maximum fine that organizations can be hit with for the most serious infringements of the regulation is 4% of their global annual turnover (or €20M, whichever is greater). Though data protection agencies will of course be able to impose smaller fines too. And, indeed, there’s a tiered system of fines — with a lower level of penalties of up to 2% of global turnover (or €10M).

This really is a massive change. Because while data protection agencies (DPAs) in different EU Member States can impose financial penalties for breaches of existing data laws these fines are relatively small — especially set against the revenues of the private sector entities that are getting sanctioned.

In the UK, for example, the Information Commissioner’s Office (ICO) can currently impose a maximum fine of just £500,000. Compare that to the annual revenue of tech giant Google (~$90BN) and you can see why a much larger stick is needed to police data processors.

It’s not necessarily the case that individual EU Member States are getting stronger privacy laws as a consequence of GDPR (in some instances countries have arguably had higher standards in their domestic law). But the beefing up of enforcement that’s baked into the new regime means there’s a better opportunity for DPAs to start to bark and bite like proper watchdogs.

GDPR inflating the financial risks around handling personal data should naturally drive up standards — because privacy laws are suddenly a whole lot more costly to ignore.

More types of personal data that are hot to handle

So what is personal data under GDPR? It’s any information relating to an identified or identifiable person (in regulatorspeak people are known as ‘data subjects’).

While ‘processing’ can mean any operation performed on personal data — from storing it to structuring it to feeding it to your AI models. (GDPR also includes some provisions specifically related to decisions generated as a result of automated data processing but more on that below).

A new provision concerns children’s personal data — with the regulation setting a 16-year-old age limit on kids’ ability to consent to their data being processed. However individual Member States can choose (and some have) to derogate from this by writing a lower age limit into their laws.

GDPR sets a hard cap at 13-years-old — making that the defacto standard for children to be able to sign up to digital services. So the impact on teens’ social media habits seems likely to be relatively limited.

The new rules generally expand the definition of personal data — so it can include information such as location data, online identifiers (such as IP addresses) and other metadata. So again, this means businesses really need to conduct an audit to identify all the types of personal data they hold. Ignorance is not compliance.

GDPR also encourages the use of pseudonymization (such as encrypting personal data and storing the encryption key separately and securely) — as a pro-privacy, pro-security technique that can help minimize the risks of processing personal data. Although pseudonymized data is likely to still be considered personal data; certainly where a risk of reidentification remains. So it does not get a general pass from requirements under the regulation.

Data has to be rendered truly anonymous to be outside the scope of the regulation. (And given how often ‘anonymized’ data-sets have been shown to be re-identifiable, relying on any anonymizing process to be robust enough to have zero risk of re-identification seems, well, risky.)

The incoming data protection rules apply to both data controllers (i.e. entities that determine the purpose and means of processing personal data) and data processors (entities that are responsible for processing data on behalf of a data controller — aka subcontractors).

Indeed, data processors have some direct compliance obligations under GDPR, and can also be held equally responsible for data violations, with individuals able to bring compensation claims directly against them, and DPAs able to hand them fines or other sanctions.

So the intent for the regulation is there be no diminishing in responsibility down the chain of data handling subcontractors. GDPR aims to have every link in the processing chain be a robust one.

For companies that rely on a lot of subcontractors to handle data operations on their behalf there’s clearly a lot of risk assessment work to be done.

As noted above, there is a degree of leeway for EU Member States in how they implement some parts of the regulation (such as with the age of data consent for kids).

Consumer protection groups are calling for the UK government to include an optional GDPR provision on collective data redress to its DP bill, for example — a call the government…

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