CBI: EU data protection proposals will harm business

The Confederation of British Industry (CBI) has warned the EU that its proposed modifications to the EU Data Protection Act would place a heavy burden on European businesses and could “strangle innovation”.

Compliance with the new rules would “place a cost burden on all businesses which may deter investment and be passed on to consumers”, the CBI said on Friday. The rules would also create uncertainty and deter investment, the CBI said.

Harmonisation

The EU argues that privacy regulations must be harmonised across Europe, and while the CBI said it agrees with this aim, it said the current plan is unworkable. The CBI has drafted a paper on the matter in response to a call for evidence on the matter by the UK’s Ministry of Justice.

Specific issues singled out by the CBI include a high cost of compliance on the part of businesses and punitive fines – which could amount to up to 2 percent of a company’s annual turnover – in the case of data breaches.

On the other hand, placing further limits on the way data may be shared could make many innovative business models impossible, the CBI said.

“Many novel business models rely on data-sharing to generate revenue and offer a more individually-tailored user experience,” said the CBI’s director for competitive markets, Matthew Fell. “Advertising and subscription-based online music-sharing services are a good example, where we’ve recently seen ground-breaking innovation through partnerships with social networking sites.”

He said threatening this kind of innovation is not a good idea at a time when European businesses are struggling to compete on a global scale.

“We’re concerned that the EC’s proposed data protection reforms will put European businesses at a competitive disadvantage in a global market, by placing restrictive controls and high cost-burdens on innovation and investment,” he said.