As our lives move increasingly online, more and more people are realising how relevant data protection is to them.
Today, January 28, has been designated by the Council of Europe as Data Protection Day, to “give citizens an opportunity to understand what kind of data about them is collected and processed, why this is done, and what rights they have. It is also an opportunity for them to become more aware of the inherent risks associated with the unlawful use or clandestine processing of their personal data.”
Until just a few years ago, it was unimaginable that international companies would have so much data about consumers. Email providers and search engines also have reams of data about users’ interests, habits, beliefs and backgrounds. National and international regulators are struggling to keep pace with technological progress.
New EU data protection laws have been proposed, involving sanctions of up to five per cent of global annual turnover – potentially enormous sums. At a national level, Ireland’s Data Protection Commissioner informs Irish citizens about their rights and responsibilities in relation to data protection and engages in enforcement.
There has been much press speculation about data protection in the past year, with whistle-blowers’ allegations of warrantless electronic surveillance of foreign citizens and leaders by the US National Security Agency (NSA). This scandal has even damaged international relations, with widespread concern voiced about the invasion of privacy inherent in such data protection breaches. However, the arguments for and against stronger data protection laws are complex.
The complexity of the issues at stake, and differing approaches of member states, saw EU Justice Commissioner Viviane Reding lament last week that member states “have been stalling”, even two years after European Commission's data protection plans were proposed.
Mr Reding said, “The goal is to make sure that businesses and national administrations do not collect and use more personal data than they need”.
Given the global nature of the internet, however, EU concerns go far beyond Europe’s borders. Mr Reding noted that “President Obama's speech concerning his ‘executive Presidential order’ on secret services and privacy shows … the awareness in the U.S. that there is a serious problem to tackle … Data protection in Europe and the U.S. should be bolstered. Our citizens and businesses deserve nothing less.”
Reflecting EU-US divides on the issue, one of the stumbling blocks in the EU’s draft regulations concerns an “anti-NSA” clause, drafted subsequent to revelations regarding the US PRISM program, where international organisations passed personal data of their users to the NSA.
This clause, if implemented, could put international companies between a rock and a hard place. On the one hand, failure to comply with an instruction from the NSA to transfer personal data, without the knowledge of the data subject, can be treated as contempt of court in the USA. On the other hand, organisations may decide that is an expensive choice, as carrying out those US-government instructions could lead to a fine of €100,000,000 or 5% of global turnover in the EU under the draft regulation.
Other countries have reacted to the spying scandals by promising to create hermetically sealed, secure online environments. For example, Swisscom, the majority Swiss government-owned telecommunications company, announced that it plans to offer a “Swiss Cloud” to companies who want to store their data securely and privately.
The company claims that the cloud would offer a higher level of security against the spying activities of national authorities than anywhere else in the world.
The increased security is largely a result of strict Swiss data protection laws - which were largely inspired by EU data protection laws. Switzerland has long been particularly concerned about maintaining the discretion of its financial services industry by preventing surveillance. It has now developed laws to match.
In stark contrast to the alleged secretive mass information gathering by the NSA, GCHQ and - if media reports can be believed – the German and French equivalents, Switzerland claims to only allow data to be retrieved for such purposes where a prosecutor has obtained a court order.
Of course, there is no guarantee that data cannot be intercepted once it crosses the border or leaves Swisscom’s network, which is something Swisscom has conceded. For now, Swisscom is concentrating mainly on Swiss companies, but says it will have capacity to serve foreign companies if the demand is there. Similarly, part of the European response to the NSA spying scandal has been to announce plans for a highly-secure Euro Cloud.
Are Swiss-Cloud and Euro-cloud really going to prevent or curtail mass surveillance? If so, at what cost to the constant fight against crime and terrorism? It was reported that the head of the UK’s GCHQ recently said, somewhat sarcastically, that it would be nice if terrorists used one type of communications network and the rest of us used a different one. According to GCHQ, such surveillance has meant that 34 terrorist plots have been thwarted in the UK since the 7/7 London bombings. Many people might be quite happy to suffer a somewhat lessened guarantee of total data privacy, if it saves lives.
While highly-secure closed clouds might benefit Switzerland and Europe in the short term, has it been considered how compartmentalising the flow of data in ring-fenced clouds might impact on global economic growth? In the information age, such a move might be analogous to the economically destructive trade protectionism of yesteryear.
Attracting foreign investment is another issue: If Ireland were to decide to implement an onerous data protection regime, this could be profoundly off-putting to the many leading technology companies thinking of setting up operations here, which are doing so much to drive Ireland’s economic recovery.
Overly-onerous data protection laws can also prove burdensome to small businesses and voluntary organisations. For example, even a local football club becomes subject to data protection requirements if the club secretary holds the contact details of its members on his mobile phone.
In the debates about data protection and privacy, governments are struggling to keep pace in the uncharted waters of our online age. However, national data protection supervisors increasingly yield significant powers and take their role very seriously. Ultimately, however, data protection failures can cause very significant reputational and financial damage to governments, banks and other organisations - precisely because of how much data protection has already come to matter to ordinary citizens.
This article originally appeared in The Sunday Business Post in January 2014.