30 April 2018

Financial Times: Europe bets its data law will lead to tech supremacy

John Thornhill argues that the very threat of the GDPR has forced every responsible business in Europe to scrutinise how it gathers, stores and uses data, which is a good thing. Yet there are several glaring drawbacks to the regulation.

One test of any legislation is how effectively it can be implemented. In that regard, the law is likely to fall woefully short. Such is the complexity of the regulations that it is hard for any company to know whether it is fully compliant. Pretty much any organisation could be found in breach.

In Brussels, even the champions of the GDPR privately admit that implementation is likely to be arbitrary and dependent on the effectiveness of national regulators. Ironically, those regulators have been stripped of many of their most expert staff by big companies desperate to hire more data protection officers.

Second, as is often the risk with onerous regulation, the legislation may have the perverse effect of stifling competition and innovation, reinforcing industry incumbents rather than encouraging insurgents. The costs of compliance may also impose barriers to entry.

Third, the GDPR is likely to hobble the short-term development of Europe’s artificial intelligence industry, recently identified as a strategic priority. Some trade associations argue that by limiting data flows and raising legal risks, the regulation will chill the sector. If data are the feedstock on which the algorithms gorge, then Europe may be rationing its most precious commodity.

The conclusion of one US tech lobbyist that the GDPR would “kill people” because it would prevent the transfer of medical information may be extreme, but there seems little doubt that Chinese AI companies, almost wholly unfettered by privacy concerns, will have a raw competitive edge when it comes to exploiting data.

Europe’s counter-bet is that the GDPR will eventually become the global regulatory norm. Privacy will emerge as a new battleground for tech supremacy. But the early signs are not promising. Outside Europe, the US tech groups seem more intent on evading the law’s principles than abiding by them.

Nonetheless, some of Europe’s entrepreneurs are surprisingly gung-ho about their chances of competing in what they call the next generation internet. [...]

Full article on Financial Times (subscription required)

© Financial Times