The conundrum of data sovereignty in the digital age
Data sovereignty isn’t a single concern.
It is a multifaceted and dynamic part of data protection and privacy. It encompasses regulatory compliance, international data flows, personal privacy, data security, business operations, and the influence of emerging technologies.
Recent trends show that global data transfers are surging - in 2021, 71% of companies transferred data from the EU to other countries.
International companies need to understand ownership and governance to balance safeguarding data nationally with the business necessity to share it beyond borders. It's not just about compliance; it is about protecting reputation and a commitment to data protection principles.
The legal maze of data sovereignty, data sharing and data transfers
The legal complexities of data sovereignty are growing with added data-sharing laws and considerations. Different countries and regional blocs have distinct rules governing how their citizens' data can be used.
The cornerstone of data protection laws, GDPR (General Data Protection Regulation) says that all organisations must comply with its data protection standards for EU citizens - regardless of their location in the world. After the Schrems II case in 2020, cross-border data transfers between the EU and the US need meticulous assessment of data protection measures like Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs).
For many, data transfers are a huge challenge today. Meta’s recent case is just one example - Ireland's Data Protection Commission imposed a €1.2 billion fine and ordered a halt to personal data transfers from Facebook users in Europe to the US, despite the use of SCCs and supplementary measures.
Other nations across the world are also cracking down on data sharing. China has enforced data localisation rules like the China Cybersecurity Law, and India’s initial Personal Data Protection Bill faced controversy and pushback from Big Tech. Even within the US data-sharing regulations vary by state.
On the other hand, efforts like the United Kingdom/United States data bridge aim to smooth data transfers between the UK and the US - which will reduce bureaucracy, expand international trade opportunities and stimulate economic growth.
How can businesses tackle the challenges of data sovereignty?
Data sovereignty laws present challenges. Not only do potential conflicts between local and international laws pose complications with data management (like data storage, access control, and transfers); but data breaches are a significant risk. The consistent exchange of data exposes various vulnerabilities - from cyberattacks to unintentional employee breaches.
To navigate these complexities effectively, businesses can leverage solutions like cloud-based storage, that are adaptable to diverse legal requirements.
For example, if a US business’ customers are based in the EU, flexible cloud storage allows for customers’ personal data to remain in the EU, abiding by GDPR compliance.
Innovative technologies like blockchain for transparent and immutable data records are also useful solutions. Data anonymisation remains a powerful tool to safeguard personal information and facilitates international data sharing while upholding privacy and security standards.
It is vital for international businesses to get to grips with data protection and the legal landscape. Yes, compliance is a must - but for most businesses and an increasing number of customers, it is equally essential to safeguard sensitive information, manage customer data responsibly, particularly in cross-border transfers, and sustain trust in the global marketplace.