A number of publications including the Financial Times, have described how US lobbyists, many working for large technology companies such as Facebook and Google, have been seeking to curb the territorial extent of the proposed EU data protection reforms. The US has been aggressively lobbying the European Parliament, which is currently reviewing the proposed reforms (as described in last month's newsletter).
Under the draft data protection reforms proposed by the European Commission, the EU's data protection standards would apply not only to the activities of data controllers and processors established in the EU, but also to the processing of personal data by controllers established outside the EU where that processing relates to:
- The offering of goods or services to data subjects in the EU (which would catch online services established outside the EU which are processing the data of EU customers in the course of sales to them)
- The monitoring of the behaviour of data subjects in the EU (which is likely to apply where online providers place cookies on the equipment of EU data subjects for the purpose of tracking their online behaviour)
Sanctions for breach of the data protection duties under the new regime could include fines of up to €1 million or 2% of annual worldwide turnover for serious compliance failures.
US technology companies are arguing that it would be unfair for them to be subject to EU laws that are too stringent and could result in expensive administrative burdens and large fines. However Viviane Reding, the EU commissioner for justice, has said that the EU is determined to respond "decisively" to any attempts by US lobbyists to curb the EU data protection reforms.
US government officials have warned that if the legislation is passed as planned it could start a trade war between the EU and the US, and Washington has been trying to water down the EU's legislation by handing US companies a de facto exemption from it.
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