Brunswick Review Issue 9

Think global, act local

Business can avoid a fragmented global landscape on data regulation by speaking up, say Brunswick’s Mark Seifert and Kate Tellier

The more business remains on the sidelines in the public conversation over the use of data, the more global policymakers will take the lead, tackling ethical questions surrounding data collection, privacy and security.

Political leaders want to see data used for innovation to drive economic gains, support industries and improve social services, but they are also moving to respond to citizens’ concerns. “As businesses navigate the digital world, there is no more fundamental issue to address than protecting their customers’ privacy,” says Nuala O’Connor, CEO of the Center for Democracy and Technology, an international non-profit promoting an open, innovative and free internet. Many businesses are making great efforts to protect their data, but communication about those efforts has been spotty at best.

More importantly, the positive potential of data needs to be emphasized to address growing public anxiety. Ultimately, data collection and analysis could serve to change our nature as a species as fundamentally as the harnessing of fire. If the perception of value is obscured by public concerns, which are growing around the world, that transformation could be snuffed out.

In the European Union, the future of data is being factored into plans for continued economic recovery. While some proposals would make online business easier by simplifying laws, negotiations around others, such as the Transatlantic Trade and Investment Partnership with the US, have triggered data protectionism based on privacy concerns, with the potential to restrict international data flows. Similarly, in an idea modeled on the Schengen zone – where most of Europe functions as a single country for international travel purposes – data coming in and out of Europe would be restricted, while internal traffic would not.

In the US, the Republican-controlled Congress is set to take a pro-business, decidedly deregulatory approach. That effort could face a strong challenge from Democrats as the Obama administration, now in its final two years, is willing to assert executive power to institute greater regulatory scrutiny. The White House recently appointed its first chief data scientist to ensure that national data is not misused and to investigate ways to help people share information without sacrificing privacy. Headed into the presidential election in 2016, both parties will attempt to present a balance between consumers’ privacy concerns and the transformative potential of data analytics.

“In this new Congress, I will be focusing on a pro-innovation technology agenda that relies heavily on an open internet,” says Republican Senator Orrin Hatch of Utah. “In particular, we must address the complex legal web around data security, including the ways data is used, stored and accessed globally.”

Senator Ed Markey, a Democrat for Massachusetts, says, “Consumers, not corporations, should have control over their personal information in this era of Big Data. Whether it is protecting our children’s education records or the sensitive information of American consumers, Congress needs to ensure that our policies are imbued with our time-tested privacy values.”

South America is leaning toward an EU-style precautionary approach that favors domestic companies. A provision mandating data localization in Brazil’s recently enacted Marco Civil da Internet, a civil rights framework, would have been aggressively nationalist, but was removed from the final version.

Most major economic centers in Asia have enacted privacy legislation but enforcement is in its infancy. In addition, regulators in emerging economies are exploring appropriate responses that avoid pitfalls experienced in the EU and the US.

Many of the EU initiatives to restrict the use of data stem from misperceptions about what companies actually do with data and how this contributes to society.

A clearer narrative from business, including an emphasis on the critical distinction between personal and non-personal information, could help loosen this regulatory knot and raise confidence in the positive impact of data.

“I like to think of data as having value, but it might be oil or it might be blood,” says Robert Madelin, Director-General of Communications Networks, Content and Technology for the European Commission. “Our ethical stance, if my data is blood – if it’s going to save lives – is different than if my data is of a sort that can be ethically monetized.”

Scanning the global landscape, we appear headed toward a discordant set of rules that could result in the fracturing of the internet, undermining its power as a global, equal-access knowledge base. A heavily pro-business argument that ignores consumer concerns could inadvertently strengthen support for nationalist regulatory tendencies.

So what should companies do, especially multinationals, within this regulatory patchwork? In a word: engage.

Most companies understand the power of data analytics for their business. They should also recognize the threat of regionally based regulation. By getting ahead of consumer and government concerns, companies can move toward a more nuanced conversation about how data is being handled and the power of analytics to change society for the better. Multinational companies are best positioned to make this case, thinking globally and responding locally.

Unleashing the digital revolution in a controlled environment could bring unimaginable benefits. Businesses should start to tell that story, before overly stringent regulation hijacks the narrative.

Mark Seifert is a Partner in Brunswick’s Washington, DC office, advising on corporate data, privacy and cybersecurity. Kate Tellier is a Director in Brunswick’s Brussels office and advises on European public affairs related to the digital economy. Additional reporting by Mathilde Bonneau, Account Director in Brussels.

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