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Abu Dhabi, UAEThursday 21 June 2018

Europe's D-Day for data could spell lost business opportunities

The continent is hoping access to its market is enough leverage to enforce compliance with its rules but could find itself being accused of state-sponsored meddling, writes Damien McElroy

French President Emmanuel Macron talked tough on privacy and social media when he met Facebook CEO Mark Zuckerberg at a tech summit in Paris last week. Christophe Petit Tesson / Reuters
French President Emmanuel Macron talked tough on privacy and social media when he met Facebook CEO Mark Zuckerberg at a tech summit in Paris last week. Christophe Petit Tesson / Reuters

Email inboxes across Europe have been flooded with pleas and warnings from businesses to subscribers.

If recipients could weigh the messages and receive payment by weight in gold, the deluge would be an extremely profitable one.

The cause was Friday’s deadline for the General Data Protection Regulation (GDPR) to come into effect.

Depending on which side of the fence the commentator fell, the new law was an overdue victory for individual rights in the data era or needless state-sponsored meddling in private business affairs.

The big picture is that Europe is desperate to prove itself a major player in the digital world. By defining its regulatory framework around the individual, the bloc puts its global reach on display.

The scope of its measures falls badly short of the promised revolution. In fact, the whole exercise might prove to be self-harming for the Europeans.

Any business or entity running a mailing list was, by Friday, required to establish permission for each address it held. The means of doing so ranged from emailing a new request to rejoin to merely informing the recipient that permission had been given at an earlier date.

Some businesses have made a virtue out of the necessity by offering vouchers or sales discounts to those reconfirming.

Others have tersely emailed a statement to their entire mailing list. Thus old hotel bookings and shopping habits have re-emerged in private accounts, sometimes years after any customer contact.

While the impact of the new law provided a watercooler talking point, the effect on Silicon Valley is still up in the air.

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Read more on GDPR:

New EU data protection law a milestone in privacy regulation

Europe's new GDPR data protection ruling will affect companies in the UAE

Facebook says there could be more data leaks

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Mark Zuckerberg and other tech magnates toured the continent last week under pressure to respond to critics of their business practices.

The Facebook leader went to Brussels, where he faced a panel of leading European politicians. In a tactical error, the politicians asked all their questions in one go, allowing Mr Zuckerberg to pick and choose which ones he answered.

The session was, in short, an exercise in relationship management by Facebook top brass.

A day later, Mr Zuckerberg was in the company of French President Emmanuel Macron at a high-profile tech summit in Paris.

The French leader spoke a lot of tough words. There was no such thing as a free lunch for social media giants.

He demanded "commitments” on tackling the scourge of fake news, firm action on removing terrorist content and safeguards against state-sponsored meddling on their platforms.

Going further, Mr Macron wanted big operators to work for the global good, championing social protections and privacy priorities.

For decades, America has been at the forefront of digital innovation, as evidenced by the growth of the massive so-called Faang (Facebook, Apple, Amazon, Netflix and Alphabet’s Google) businesses.

Conversely Europe made itself a player on the anti-trust agenda, regularly doling out fines for anti-competitive practice to Microsoft and others or making the likes of Apple pay out tens of billions in taxes.

The GDPR initiative is Europe’s gambit to make itself the rule-giver of first resort on the big issue of today. As individuals, we are the generators of data.

The very concept relies on human actions, choices and aspirations. Processing and exploiting data presents the greatest economic opportunity the world has ever witnessed.

Europe is out of the regulatory starting blocks while America refuses to act. The US remains in thrall to Silicon Valley.

Meanwhile China has set its sights on the very communist concept that the state can own and exploit the digital future without any restrictions.

Three very different positions. There will be a gold, silver and bronze set of outcomes.

The European approach plays a weak hand well but it is unlikely to unlock the advantage over global rivals that the continent seeks.

Facebook, for example, has removed its global users from an Irish company to one outside the bloc. This effectively quarantines the European subscriber base.

Europe threatens big fines for abusing customer data. The penalty is up to $23.3 million or 4 per cent of global turnover, which ever is greatest.

Smaller businesses can take a different approach. Apps that want to avoid the burden of compliance can – and examples have already been identified – refuse to enroll users domiciled in Europe.

The result is that Europeans will lose opportunities in commerce.

Europe is hoping access to its market is enough leverage to enforce compliance with its rules. This prescriptive approach is more likely to be limiting to its own people.

What the continent really needs is to create business that thrives on the European ethos.

There are those that saw Friday as GDPR Day, a moment that will be remembered forever as a sort of positive Y2K.

But for all the hype last week, GDPR is likely to go the way of all clumsy acronyms – consigned to history's dustbin.