New EU data protection rules require a delicate balancing act

Nick Stringer, director of regulatory affairs at the Internet Advertising Bureau, warns that proposed reforms to consumer data protection rules could harm the e-commerce and advertising industries

The IAB's Nick Stringer

A year ago, in January 2012, the European Commission proposed changes to the way personal data is protected and regulated across EU markets. The proposals were driven by a need to update the law in light of technological changes since 1995 (when the current law was framed in Europe) as well as streamlining the rules to make it easier and more efficient – particularly in an internet world - for businesses operating across territories, saving millions of pounds in administrative burdens. Above all, the proposals were aimed at affording European citizens with a strong level of data protection and accountability, fostering a new climate of trust in the services we all use.

Back in 1995 this was a relatively straightforward exercise: in most cases we knew what information we were sharing, how it would be used and how it would be safeguarded. Whilst the top-level principles of data protection enshrined in the current law remain equally valid, data usage and exchange is far more widespread in a digital age. Data now underpins the internet, business models and the majority of services that we depend on and enjoy, including the delivery of public services. New business models and new innovations mean better, more efficient and more tailored services.

So revising data protection law requires a delicate and proportionate balancing act: one providing strong safeguards as well as incentives for organisations to build privacy into product cycles (eg enhancing transparency and control in targeting advertising) but also one that is not so restrictive on the use of data that it throttles small business and innovation, the bed rock of our increasingly important digital economy.

Unfortunately the drafters have failed to achieve this balance. And recent proposed changes by our elected European representatives do not seem to be achieving this objective either. As currently drafted the proposals risk chilling the evolution of business models by significantly restricting the use of data and denying small businesses and retailers the revenue that they require to support, drive and develop their activities.

Let’s not forget that many of the world’s greatest innovations come from lone entrepreneurs operating out of borrowed office space. They can only become commercial successes because of a policy and business environment that ensures low barriers to entry, enables them to ‘scale up’, and allows them to challenge established businesses. To date it is this environment that has been good news for competition, good news for British business and good news for the UK consumer.

IAB research shows that UK consumers recognise the need and importance of for an ad-funded internet. However, these proposals threaten to change all that, and with it the UK’s role as one of the world’s leading digital hubs for small business, ecommerce and advertising.

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