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GDPR came into force: companies were not ready
On May 25, the European Union officially switched to the new rules for the processing of personal data GDPR (General Data Protection Regulation EU 2021/679 of April 27, 2021). An important feature of the GDPR is the extraterritorial principle of operation, so that it affects US and Russian companies serving consumers in the EU. Fines can reach € 20 million or 4% of the company’s income in the global market per year. For ordinary users, outwardly, little will change: as a rule, you will have to again accept various agreements on the processing of their personal data, but the protection of the latter is provided at a much more serious level.
In the GDPR, personal data means any information relating to an individual, by which it is possible to directly or indirectly identify him. That is, we can talk about name, location data, online ID, and other factors such as IP address that help to establish an individual. There are also special confidential personal data: racial or ethnic origin, political views, religious or philosophical beliefs, genetic and biometric information, health information, sexual life.
The main principles for the processing of personal data under the GDPR are:
- personal data must be processed lawfully, fairly and transparently, and companies must present any information about the purposes, methods and volumes of personal data processing in the most accessible and simple way;
- the data must be collected and used exclusively for the purposes stated by the company or service;
- you cannot collect personal data in a larger volume than is necessary for the purposes of processing;
- inaccurate personal data must be deleted or corrected at the request of the user;
- personal data should be stored only in the form and for the period that allows the person to be identified for the stated processing purposes;
- when processing personal data, companies are obliged to ensure their protection from unauthorized or illegal access, destruction and damage.
GDPR requires that the user’s consent to the processing of his personal data be expressed in the form of an approval or in the form of clear active actions. In addition, consent may be considered invalid if the user did not have the opportunity to withdraw it without prejudice to himself. The consent to the processing of the child’s data (depending on the EU states – up to 13-16 years old) must be authorized by the parents or legal representatives.
Companies must report any breaches of personal data to regulators within 72 hours of discovering the problem. In the event of additional delays or attempts to hide the fact of leaks, companies cannot avoid.
EU citizens and residents within the framework of the GDPR receive extended rights regarding their personal data. They have the ability to request confirmation of the fact of processing their data, the period, place and purpose of processing, categories of information, the name of third parties to whom personal data are disclosed, clarify the source of the data received by the organization and require amendments. Also, the user has the right to demand the termination of the processing of his data.
An interesting innovation of the GDPR is the right to data portability, which obliges companies, upon the user’s request, to transfer the latter’s personal data to another company free of charge. That is, the user can ask, for example, to transfer the entire history of their queries from one search engine to another or purchase preferences from one store to another.
Many users were preparing for May 25 in earnest, so as soon as the GDPR rules came into force, lawsuits amounting to millions of euros fell on a number of major companies like Facebook, Google and Instagram. The plaintiffs, among other things, accused the companies of compulsory consent: that is, they were asked to confirm their consent to the GDPR without a clear explanation of the essence of all innovations, or the company called the new user agreement a change in internal regulations, allegedly in order to confuse people.
GDPR rules were discussed for four years, regulators gave companies two years to bring their policies and infrastructure in line with GDPR. Many did it in advance, but most were not ready for innovations.
According to Jason Straight, attorney and chief privacy officer at United Lex, few companies, especially American ones, are fully GDPR-compliant. In a survey of over 1,000 businesses conducted by the Ponemon Institute in April, half of the companies said they would not be able to meet the deadline. If we talk about the technology sector, there were 60% of them.
“For many years the companies have been working according to the principle: „How much personal data we can get from users? And how to use this array of information, we will find out later!“This will not be an acceptable way of working under the GDRP,” said Mr. Straight. – There are some companies we spoke with that are outraged: „You are joking? If we told people how we use their data, they would never give it to us!”. And I say something like this in response: „Yes, in part, this is the purpose of the new rules “”.
For companies that have acted on the principle of extracting as much information about users as possible for subsequent possible analysis, reorganization under the GDPR can in many ways turn out to be torture: after all, you need to remove unnecessary information, leaving only the most necessary for current tasks.
But perhaps the most serious GDPR requirement that horrifies the company is the right to request access to personal data. EU users can request deletion of information, correct it if it is incorrect, and even receive it in a form that is easy to transfer. But this data can be on five different servers in a lot of different formats. In other words, the transition to GDPR standards requires the creation of an internal infrastructure that allows you to efficiently handle user requests.
Also, personal data is a fuzzy category. Names, email address, phone numbers, location data – it’s obvious. But there are more ambiguous data such as indirect references: “A tall bald guy who lives on the right side of Lenin Street”. According to Jason Strait, if someone wrote this in a letter, formally, as part of the GDPR, the company must provide this information upon request.
Switching to GDPR is a painful procedure. For example, a year ago, 61% of global companies did not even start work on adapting new rules. It is clear that European businesses, especially in countries like Germany and the UK, where there were previously rather strict privacy laws, are better prepared. However, a poll in January 20221 found that a quarter of London companies don’t even know what GDPR is.
Alison Cool, professor of anthropology and computer science at the University of Colorado at Boulder, wrote in The New York Times that the law is dauntingly complex and incomprehensible to people trying to comply. Scientists and data managers she spoke with question whether full compliance is even possible. This is a wake-up call given the fact that fines can be as high as 4% of global revenues (that is, they can easily rob all profits).
The adoption of the GDPR led US businessman Peter Thiel, co-founder of PayPal and president of hedge fund Clarium Capital, to accuse the EU of villainous protectionism during a conversation at the New York Economic Club in March: “There are no successful tech companies in Europe, and they are jealous of the United States, which is why they punish us “.
Since the rules of the GDPR are in many ways ambiguous, their implementation in practice will depend on the actions of the regulatory authorities. Ultimately, norms will emerge: who will be prosecuted by the authorities, what fines should be levied on violators and for what behavior. It is assumed that at first the regulators will not be fierce – they will give companies time to get used to the new reality. But it is difficult to accurately predict the future, because partly the implementation of the GDPR depends on the activity of users.
If an EU resident submits a request to obtain his personal data, the company has 30 days to respond. For example, a company receives one of these requests but is still not fully GDPR ready and literally unable to respond. If she does not respond, the data subject can lodge a complaint with local authorities. The GDPR requires the regulator to take action to enforce the law. The fine may not be as high as 4%, but officials cannot simply send complaints to the trash bin. And if there are thousands of requests, problems will begin. 17 out of 24 EU regulators polled by Reuters this month said they were not ready for the new law because they did not have funding or legal authority to fulfill their responsibilities.
Another situation is related to reporting leaks: companies are obliged to report problems to the authorities within 72 hours, but what should be the reaction of the latter is not entirely clear. Regulators may not be prepared for a company security audit or other measures to protect the privacy of EU residents. GDPR should only apply to EU residents, but most internet companies do business in the EU, so they need to be prepared to respond to GDPR requirements. Gradually, the adoption of such legislation may become the norm in other countries. Meanwhile, there are news that the new EU regulation on the protection of personal data is forcing companies to abandon European traffic.