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Thursday, October 8, 2015
How Data Protection Laws Affect Startups
Data Privacy Laws vs. Advanced Tech for Startups
Two major developments happened in the field of data privacy and
technology in Europe the past couple of weeks. The European Union
announced their draft data protection legislation and the Moments app
from Facebook was banned from Europe. At least until its built-in facial
recognition technology includes an opt-in feature. This has made tech
enthusiasts and innovators start wondering about the rules governing
tech innovation when it comes to data protection.
It has all happened too fast
The rapid pace of technological innovation has left the regulations
lacking in many ways. For example, the data protection rules are uniform
across the EU, as well as surprisingly ambiguous and flexible. In
theory, uniformity should reduce business costs and strengthen privacy
and security. In reality, the business climate, cultural expectations
and ideas about privacy vastly differ in European countries. This
results in each member state interpreting the rules in a different way.
There is no consistency and therefore no concrete way of dealing with
advanced technology like Facebook's facial recognition tech or the
Whatsapp encryption software. Many of the current laws were drawn up
when Windows '95 was the latest and greatest, long before social
networking and high-speed Internet took off.
Bad news for startups with global ambitions
The very nature of data protection is in dull contrast to the high-speed
and vibrant world of global tech. Face it, it is not likely that the
two will ever become true friends. If a tech giant like Facebook can get
into trouble, imagine what data protection laws can do to smaller startups. Even if the rules are clearly defined and set in judicial
stone, it will likely still fall short when it comes to startups hoping
to enter the international market. To make matters worse, what is
happening in Europe is not isolated. Most of the world is debating the
balancing act between privacy and tech development.
What is a startup to do?
Startups that are unleashing bleeding edge tech should get legal help if
possible. If this is not possible, the only way to move forward is to
be 100% ethical and to tread very carefully. European regulators
appreciate transparency so it is usually wise to disclose how customer
data is used. This is also a prime opportunity to demonstrate the
benefits of the market offering. By building in clear opt-in and
opt-outs, the tech is more likely to be treated positively - obviously
especially if there is some kind of facial recognition tech in the