European Union: What Is The GDPR? The eData Guide To GDPR

Last Updated: June 18 2018
Article by Vincent M. Catanzaro and Patrick J. Campbell Jr.

The General Data Protection Regulation (GDPR) is historic legislation in both its rigor and reach. It affects citizens and companies worldwide and is likely to change the way European and global organizations in every sector store, process, and interact with data. Affected companies are now tasked with understanding GDPR requirements and implementing ways to meet them. But to understand what the GDPR requires, it is instructive to first examine what the GDPR is. What was the genesis of this game-changing legislation, the historical catalysts for its creation, and what is its guiding purpose? This installment of The eData Guide to GDPR discusses the foundational rationale of the GDPR and the key enhancements it brings to EU data protection.

In the days leading up to its long-awaited enactment on May 25, news outlets reported that "GDPR" surpassed "Beyonce" in Google searches, and inboxes flooded with GDPR-related change of service emails as websites owned by everyone from the band Rage Against the Machine to National Public Radio changed their consent forms in an effort to comply with the regulation. While this wave of GDPR-related media attention may seem to have come out of nowhere, the foundations of the legislation go back for some time. Indeed, the European Union has long considered private data protection to be a fundamental right, and the GDPR is just the latest (albeit the most comprehensive) iteration in EU attempts to strongly protect EU personal data while balancing the rights and obligations of data controllers and processors.

Reasons for Adoption and Rights Protected

The Recitals contained in the GDPR provide the "reasons the articles of the GDPR have been adopted" and describe the rights the GDPR protects. Among others, Recital 1 states that data protection is a fundamental right; Recital 3 calls for harmonization of these fundamental rights between EU member states to ensure the free flow of personal data; Recital 4 elaborates that the regulation respects "all fundamental rights and observes the freedoms and principles . . . including respect for private and family life, home and communications, the protection of personal data, freedom of thought, conscience and religion, freedom of expression and information, freedom to conduct a business, the right to an effective remedy and to a fair trial, and cultural, religious and linguistic diversity."

Because the EU places "the right to the protection of personal data" on equal footing with freedom of thought, conscience, religion, expression, and other important and fundamental rights, the GDPR seeks to protect that right with a stronger regulation backed by serious penalties for violation that are unmatched anywhere else in the world. Building on older regulations and directives, the GDPR broadens protections and places greater burdens on personal data controllers and processors in order to achieve its goal.

Historical Perspective

A look at the historical evolution of data protection as a fundamental right, as well as prior direction from regulatory bodies, informs an interpretation of the new regulation that can help companies anticipate the rigorousness of GDPR enforcement.

EU Personal Data Protection Convention

In 1981, the Council of Europe's Personal Data Protection Convention (Convention 108), which had a declared purpose "to secure in the territory of each Party for every individual, whatever his nationality or residence, respect for his rights and fundamental freedoms, and in particular his right to privacy, with regard to automatic processing of personal data relating to him" created the first binding international law protecting an individual's personal data. This convention is recognized as the basis for subsequent regulatory efforts that have culminated in the GDPR. For example, the convention's definitions ("personal data" is defined as "any information relating to an identified or identifiable individual ('data subject')") and basic principles are carried through subsequent attempts at regulation, including in the GDPR, which contains virtually identical language.

The scope of the convention was limited to automatic processing of data from both public and private sectors. However, it let EU member states limit or expand applicability by allowing them to exclude categories of personal data, or expand the scope beyond automatic processing or to protect more than natural persons (i.e., groups, corporations, and the like). It called on each member state to implement a regime for sanctions and remedies, but made no provision or suggestions as to what form those regimes might take.

While Convention 108 provided a framework around which nations could create regulatory regimes and required them to do so, its critics charged that it allowed for too much variation in implementation.

The Data Protection Directive

The Data Protection Directive (DPD),1 implemented in 1995, sought to remedy some of the failings of Convention 108. The DPD applied to all types of personal data processing, required member states to create national authorities to enforce the directive's provisions, and allowed individuals to seek redress for DPD violations. It also refined the definition of "personal data" by attempting to clarify what an "identifiable" person might be by giving examples such as the use of "an identification number" or specific factors such as "physical, physiological, mental, economic, cultural or social identity." Importantly, the DPD put forth the idea that such identification could be made "directly or indirectly," which both broadened the kinds of data that could qualify as personal data and made clear that the use of information from external sources could be considered in evaluating whether data was personal data. The DPD reserved the power to impose sanctions and remedies to individual countries.

Concerns Stemming from NSA Surveillance

The EU's fervor for data protection was stepped up again in 2014 after revelations surfaced about the US National Security Agency's (NSA's) surveillance methods. In a speech on January 28 of that year (EU's Data Protection Day), EU Vice President and Justice Commissioner Viviane Reding, calling for a new data protection compact for Europe, stated:

Data collection by companies and surveillance by governments. These issues are connected, not separate. The surveillance revelations involve companies whose services we all use on a daily basis. Backdoors have been built, encryption has been weakened. Concerns about government surveillance drive consumers away from digital services. From a citizen's perspective, the underlying issue is the same in both cases. Data should not be kept simply because storage is cheap. Data should not be processed simply because algorithms are refined. Safeguards should apply and citizens should have rights. Ladies and Gentlemen, trust in the data driven economy, already worryingly low, fell further when the first NSA slides were published. The priority should be to restore it.

Emergence of the GDPR

Thus began the process for a stronger, more unified law, since variation still remained despite the existence of the DPD. Moreover, the DPD was adopted before broad-based use of the internet and the tremendous capabilities it provided for the creation, sharing, and comparison of personal data. The result of modern-day efforts—which leveraged historical lessons learned—is the GDPR, which values and seeks to protect the fundamental right to personal data protection more than any other legislation of its kind.

The differences between the DPD and the GDPR highlight the importance that the European Union places on the protection of personal data—and the seriousness with which we can expect that transgressions will be treated. Below are some examples of where the GDPR enhanced or strengthened previous protections:

  • While prior regulation allowed the consent of the data subject to be a valid basis for the processing of personal data, the GDPR is much more explicit in emphasizing that that consent be given willingly, knowledgeably, and unambiguously.
  • Under the GDPR, data breaches should be reported, if significant enough, to those who may be impacted.
  • The DPD mentions data protection by design and by default, but this concept is more fully developed in the GDPR, and should be considered from the design stage of systems for processing data.
  • Organizations also may be required to appoint a data protection officer to oversee compliance efforts.

But perhaps the most significant examples of the seriousness with which the European Union will treat personal data protection are two of the bigger changes:

  1. Change in scope to cover every EU data subject anywhere in the world
  2. Provision for sanctions and remedies, with potential penalties for violations of €20 million ($23.2 million) or up to 4% of annual worldwide revenue

With the GDPR's enhanced regulatory regime, expansive geographic scope, and eye-popping sanctions appearing for the first time in a global data privacy regulation, the European Union has shown that it is willing to take great measures to ensure the protection of EU personal data—within the European Union and around the world.

Footnote

[1] Directive 95/46/EC

This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.

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