Opinion: How To Design A US Data Privacy Law

September 30, 2024 TH Author headline,government,privacy,usa,data loss,identity theft

Nick Dedeke is an associate teaching professor at Northeastern University, Boston. His research interests include digital transformation strategies, ethics, and privacy. His research has been published in IEEE Management Review, IEEE Spectrum, and the Journal of Business Ethics. He holds a PhD in Industrial Engineering from the University of Kaiserslautern-Landau, Germany. The opinions in this piece do not necessarily reflect the views of Ars Technica.

In an earlier article, I discussed a few of the flaws in Europe’s flagship data privacy law, the General Data Protection Regulation (GDPR). Building on that critique, I would now like to go further, proposing specifications for developing a robust privacy protection regime in the US.

Writers must overcome several hurdles to have a chance at persuading readers about possible flaws in the GDPR. First, some readers are skeptical of any piece criticizing the GDPR because they believe the law is still too young to evaluate. Second, some are suspicious of any piece criticizing the GDPR because they suspect that the authors might be covert supporters of Big Tech’s anti-GDPR agenda. (I can assure readers that I am not, nor have I ever, worked to support any agenda of Big Tech companies.)

In this piece, I will highlight the price of ignoring the GDPR. Then, I will present several conceptual flaws of the GDPR that have been acknowledged by one of the lead architects of the law. Next, I will propose certain characteristics and design requirements that countries like the United States should consider when developing a privacy protection law. Lastly, I provide a few reasons why everyone should care about this project.

The high price of ignoring the GDPR

People sometimes assume that the GDPR is mostly a “bureaucratic headache”—but this perspective is no longer valid. Consider the following actions by administrators of the GDPR in different countries.

In May 2023, the Irish authorities hit Meta with a fine of $1.3 billion for unlawfully transferring personal data from the European Union to the US.
On July 16, 2021, the Luxembourg National Commission for Data Protection (CNDP) issued a fine of 746 million euros ($888 million) to Amazon Inc. The fine was issued due to a complaint from 10,000 people against Amazon in May 2018 orchestrated by a French privacy rights group.
On September 5, 2022, Ireland’s Data Protection Commission (DPC) issued a 405 million-euro GDPR fine to Meta Ireland as a penalty for violating GDPR’s stipulation regarding the lawfulness of children’s data (see other fines here).

In other words, the GDPR is not merely a bureaucratic matter; it can trigger hefty, unexpected fines. The notion that the GDPR can be ignored is a fatal error.

9 conceptual flaws of the GDPR: Perspective of the GDPR’s lead architect

Axel Voss is one of the lead architects of the GDPR. He is a member of the European Parliament and authored the 2011 initiative report titled “Comprehensive Approach to Personal Data Protection in the EU” when he was the European Parliament’s rapporteur. His call for action resulted in the development of the GDPR legislation. After observing the unfulfilled promises of the GDPR, Voss wrote a position paper highlighting the law’s weaknesses. I want to mention nine of the flaws that Voss described.

First, while the GDPR was excellent in theory and pointed a path toward the improvement of standards for data protection, it is an overly bureaucratic law created largely using a top-down approach by EU bureaucrats.

Second, the law is based on the premise that data protection should be a fundamental right of EU persons. Hence, the stipulations are absolute and one-sided or laser-focused only on protecting the “fundamental rights and freedoms” of natural persons. In making this change, the GDPR architects have transferred the relationship between the state and the citizen and applied it to the relationship between citizens and companies and the relationship between companies and their peers. This construction is one reason why the obligations imposed on data controllers and processors are rigid.

Third, the GDPR law aims to empower the data subjects by giving them rights and enshrining these rights into law. Specifically, the law enshrines nine data subject rights into law. They are: the right to be informed, the right to access, the right to rectification, the right to be forgotten/or to erasure, the right to data portability, the right to restrict processing, the right to object to the processing of personal data, the right to object to automated processing and the right to withdraw consent. As with any list, there is always a concern that some rights may be missing. If critical rights are omitted from the GDPR, it would hinder the effectiveness of the law in protecting privacy and data protection. Specifically, in the case of the GDPR, the protected data subject rights are not exhaustive.

Fourth, the GDPR is grounded on a prohibition and limitation approach to data protection. For example, the principle of purpose limitation excludes chance discoveries in science. This ignores the reality that current technologies, e.g., machine learning and artificial Intelligence applications, function differently. Hence, these old data protection mindsets, such as data minimization and storage limitation, are not workable anymore.

Fifth, the GDPR, on principle, posits that every processing of personal data restricts the data subject’s right to data protection. It requires, therefore, that each of these processes needs a justification based on the law. The GDPR deems any processing of personal data as a potential risk and forbids its processing in principle. It only allows processing if a legal ground is met. Such an anti-processing and anti-sharing approach may not make sense in a data-driven economy.

Sixth, the law does not distinguish between low-risk and high-risk applications by imposing the same obligations for each type of data processing application, with a few exceptions requiring consultation of the Data Processing Administrator for high-risk applications.

Seventh, the GDPR also excludes exemptions for low-risk processing scenarios or when SMEs, startups, non-commercial entities, or private citizens are the data controllers. Further, there are no exemptions or provisions that protect the rights of the controller and of third parties for such scenarios in which the data controller has a legitimate interest in protecting business and trade secrets, fulfilling confidentiality obligations, or the economic interest in avoiding huge and disproportionate efforts to meet GDPR obligations.

Eighth, the GDPR lacks a mechanism that allows SMEs and startups to shift the compliance burden onto third parties, which then store and process data.

Ninth, the GPR relies heavily on government-based bureaucratic monitoring and administration of GDPR privacy compliance. This means an extensive bureaucratic system is needed to manage the compliance regime.

There are other issues with GDPR enforcement (see pieces by Matt Burgess and Anda Bologa) and its negative impacts on the EU’s digital economy and on Irish technology companies. This piece will focus only on the nine flaws described above. These nine flaws are some of the reasons why the US authorities should not simply copy the GDPR.

The good news is that many of these flaws can be resolved.