Unsound privacy regulation will stifle innovation

In May, the European Union enacted its General Data Privacy Regulation (GDPR). In June, California enacted its own legislation regulating use of consumer data. While the two pieces of regulation have significant differences, there is significant overlap between them.

The goal of both laws is to tilt the data privacy scales in favor of the consumer and against the internet giants such as Alphabet (Google), Amazon, Facebook and Microsoft.

Both laws have broad definitions of personal information. Both laws give consumers greater control over whether their information may be shared with third parties, and both laws allow consumers to opt out of sharing altogether.

Where the GDPR requires companies to seek customer opt-in for almost any use of data, the California law requires that customers be given the opportunity to opt out. Both laws give consumers the right to request a company disclose the data it holds about them.

Both laws also contain provisions that have been described as a “right to be forgotten.” In other words, you may request a company delete personal information it possesses about you.

Consumer and privacy advocates have hailed these laws as important first steps in regulating privacy. And, following headline stories about losing control or misusing data at places such as Target, Equifax and Facebook, consumers may feel like this regulation is needed and beneficial.

The problem with both the GDPR and the California law is that they lack clarity around fundamental terms, they threaten a business model that has been beneficial to consumers, and they jeopardize the pace of innovation and growth.

A fundamental aspect of any law is to clearly define what key terms mean. If you are regulating clean air, you need a clear definition of what a pollutant is. Similarly, if you are regulating data privacy, you need a clear definition of what personal information is.

The GDPR says personal information is “any information relating to an individual, whether it relates to his or her private, professional or public life.” That’s about as broad of a definition as you could imagine.

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