CBI warns EU over harmonised data protection rules

16 March 2012

The Confederation of British Industry has warned the European Union not to “strangle innovation” as it seeks to update and harmonise data protection rules across Europe. The trade body is warning that the present stringent EU Data Protection Act, which is very popular with consumers who don’t want to be spammed, but has slight variations across nations, needs updating sensibly so that it does not restrict businesses and threaten innovation.

In its submission to the EU, which the CBI published ahead of its discussions with the UK Ministry of Justice’s Call for Evidence on the European Commission’s data protection proposals today, the British trade body also said that the EU must be aware of how the online business community has changed since the introduction of the DPA back in the 1990s and the EU must be careful to protect firms which rely on data sharing to generate revenue. Onerous compliance procedures will also place a cost burden on all businesses which may deter investment and be passed on to consumers, added the trade body.

The CBI is calling on the governing European Commission to revise its present EU data protection proposals, which could mean large firms who breach its rules suffer a 2% fine of their annual global turnover, in favour of a more proportionate, risk-based approach.

Matthew Fell, CBI director for competitive markets, said: “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.

“Many novel business models rely on data-sharing to generate revenue and offer a more individually-tailored user experience. 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. Sharing information about music likes and dislikes online, without sharing the actual content, means millions more customers can now legally enjoy listening to music online – a lifeline for the flagging music industry. It’s innovative businesses like these, on and offline, which will be threatened by restrictive controls on data-sharing proposed by the EC, while the cost of compliance will burden all industries, deter investment, and ultimately be passed on to consumers.”

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