On May 25, 2018, the new EU General Data Protection Regulation (GDPR) came into force. For approximately five years now, EU bodies worked on this cross-European data protection reform. Until May 25, the 1995 Data Protection Directive (Directive 95/46/EC) was still in force, but the technological changes of recent decades made it necessary to revise data protection legislation; after all, the Internet was still in its infancy in 1995. These days, EU-wide data protection has to deal with big data, industry 4.0, robotics, and artificial intelligence, meaning that there was an urgent need for a new regulation. May 2018 saw the launch of these measures.
Above all, the new GDPR serves one purpose: the uniform regulation of data throughout Europe. This raises two questions for companies: What are the new regulations? And what do companies and website operators have to consider? As soon as the regulation came into force on 25 May, a number of changes had to be made to the online trade and employee data protection in companies. Therefore, if you have not yet managed to adapt to the European General Data Protection Regulation, it is high time you do so. Below we provide a summary of the new legal situation, and provide a GDPR checklist summarizing which measures you need to take in your company.
When it comes to European bureaucracy, laws can take a long time – even after they have officially come into play. After long debates in parliament in Brussels, the 28 member states will often be granted generous transitional periods to incorporate the new EU laws into their national legislation. A lot of time can pass before the pressure of implementation reaches the level of individual companies.
But in addition to directives, there is a second type of EU law: regulations. They offer almost no wiggle room when it comes to content and time period. They are immediately and uniformly legally binding for all member states – this includes the business practice of every SME. This is also the case with the GDPR: this is not a directive, but a regulation.
In May 2016, the GDPR came into force with a transitional period of two years - and since 25 May 2018, it has been the official data protection law in all EU states, overriding national legislation. This means no more transition periods, or “buffer” times. All companies and public entities working with personal data must comply with the new EU data protection rules and implement appropriate measures in their businesses.
But even today, not all companies seem to be aware of these changes. An update by GDPR report showed that only 20% of companies were GDPR compliant as of the fall of 2018. This points out that the contents of the new Data Protection Act are either still unknown to many responsible persons or are knowingly disregarded.
Ignorance, however, is not the only reason for some companies not being sufficiently prepared. Two of the biggest hurdles are legal uncertainty, as well as not knowing how much effort it will take to implement the GDPR. Many businesses and companies think that needing to obtain a concrete agreement before exchanging personal data is unnecessarily complicated, and the need to be able to prove this agreement makes it even more so. Even just keeping hold of a business card could have legal complications, when the GDPR is seen in the strictest light.
“People burying their head in the sand will soon be violating the law and risk fines at the expense of their company.”
- Susanne Dehmel, Member of the Executive Board for Law and Security at Bitkom (Source: www.bitkom.org/EN/List-and-detailpages/Press/pressinfo-detailpage-EN_17936.html)
Now many companies are facing the potential for heavy fines. Up to 20 million euros ($23 million, which is 4% of worldwide sales in the last financial year) is the potential fee which may be charged as a punitive measure. And don’t be fooled by the fact that this is ‘just’ an EU law. It will most likely affect your U.S. based business too – if you collect personal data or information from anyone residing or browsing in an EU country, your company will need to comply with the new regulations of the GDPR.
But at least in this respect, the worst forecasts do not seem to have come true. Although there have already been some phases of increased warnings, mainly against smaller companies, there has not yet been a wave of increased warnings, which opens the question to which extent the penalties threatened will be applied.
The primary objective of the GDPR is the harmonization of European data protection. Whereas the 1995 Data Protection Directive was implemented differently in each EU country, the new regulation offers less scope for action on an individual national level.
A second primary aspect addressed by the GDPR relates to the serious technological changes which have occurred over the past 25 years – as well as of course the technical developments still to come. As we cannot forget, many of the challenges of data protection still lie ahead for us. For example, the collection of biometric data from employees is mandatory for certain work with intelligent machines. If a company is sensitive to such data, this is not in itself a problem. However, if this information is first of all with the employer, there is also the temptation to use it for other purposes – such as performance monitoring. The new EU GDPR will also react to developments of this kind.
The European General Data Protection Regulation can be found online here on the Europa.eu website.
The primary objective of the GDPR is the harmonization of European data protection. Whereas the 1995 Data Protection Directive was implemented differently in each EU country, the new regulation offers less scope for action on an individual national level.
A second primary aspect addressed by the GDPR relates to the serious technological changes which have occurred over the past 25 years – as well as of course the technical developments still to come. As we cannot forget, many of the challenges of data protection still lie ahead for us. For example, the collection of biometric data from employees is mandatory for certain work with intelligent machines. If a company is sensitive to such data, this is not in itself a problem. However, if this information is first of all with the employer, there is also the temptation to use it for other purposes – such as performance monitoring. The new EU GDPR will also react to developments of this kind.
Any summary of the General Data Protection Regulation must first address the changes related to personal data. This is where the most significant changes are taking place as a result of the EU GDPR.
For example, the accountability of companies has been extended. There are now more comprehensive obligations pertaining to documentation of data and proving what data a company actually collects. These obligations also cover the purpose for which it uses the data and how it is processed. Above all, the GDPR means more work when it comes to documentation. Companies who already value data protection and have kept a register of data processing procedures have it much easier with the implementation of the regulation.
But all in all, the GDPR does not feature any fundamental reorientation of data protection. Instead it is the case that the already present data protection principles remain valid and will be continued by the EU General Data Protection Regulation. These form the basis for the new regulations, and will be more clearly formulated and expanded. The most important principles are as follows:
All in all it must be said that the GDPR is good news for every consumer and all those affected by data processing. This is due to the fact that they are protected by the GDPR. In addition, GDPR regulations also affect the rights of employees.
These rules are relevant for all companies with employees. This then means that numerous companies will be doubly affected, as it concerns the privacy of employees (employment data protection), as well as those of customers, suppliers, and website visitors.
Of course, the GDPR is of particular relevance for those employed as data protection officers. The new regulations will considerably increase the number of these throughout the continent. In the future, all public authorities and all companies, whose core activity relates to the handling of personal data, will have to appoint a company-wide data protection officer. Even if a business' core activity is not related to data processing, if it is the case that at least ten people are constantly engaged in the automated processing of personal data on the premises, then a data protection officer must be appointed. This will most likely be the case for many medium-sized companies. Companies affected by this scheme must have taken the appropriate measures already.
Even for data protection officers who are already employed by a company, the GDPR represents a major change. This is because their role in the company is fundamentally changing. If it is the case that the data protection officer has been working towards data protection conformity, in the future he or she will be responsible for monitoring the implemented measures. This increases their range of responsibility and subsequently increases their potential for liability.
Overall, the new regulations mean quite an increase in work for data protection officers. They have to familiarize themselves in detail with the new legal situation. However, the new laws also have positive aspects for them. Without a doubt their expertise will be in great demand and, as well as this, their position in the company will be enhanced due to the increasing number of tasks. Article 39 of the GDPR actually makes reference to the tasks of a data protection officer. Some of these include informing and advising in relation to the GDPR as well as other data laws, monitoring GDPR compliance, advising on the impact of the regulations, and also being available for any enquiries.
The following is a summary of the General Data Protection Regulations, focusing particularly on the innovations for website operators and companies.
Are you a 1&1 IONOS customer? Here is a checklist specifically put together for 1&1 IONOS customers, listing all the information website owners need to look out for to ensure that their website complies with the new GDPR.
Even if there is no fundamental upheaval of data protection, the EU GDPR still brings many changes into focus. It is imperative that companies take these alterations into account and, as early as the conceptual design phase, integrate them into their workflows that involve people (Privacy by Design principle). Otherwise they will end up being in violation of European law. Below you will find some of the most important new regulations that companies, especially those in the area of online commerce, need to comply with.
The GDPR contains hardly any rules which are specific to the area of online trading. Instead, it formulates general principles of data protection, the sub-areas of which are regulated by other laws and regulations. Nevertheless, the abstract standards of the General Data Protection Regulation also feature some innovations relating to online trading. More information on this can be found in the following two sections.
First and foremost, one very important thing to remember is that, in addition to the aforementioned regulations for companies, the GDPR initially means relatively few changes when it comes to online trading. The core themes for website operators – cookies, user tracking, spam, and direct marketing – are not expected to be subject to change until 2019 at the earliest.
At the moment, website operators are subject to the general principles of the Data Protection Directive 95/46/EC as well as their national media acts. The latter regulates the special legal situation for media, especially online content. Since May 2018, the GDPR will take precedence over national legislation. In practice what this means is something which could prove controversial among lawyers. In any case, the general regulations will also apply to websites, big data, as well as social media. Any future use of cookies, tracking tools, and targeting measures will also have to comply with the GDPR.
However, in many ways the GDPR is just a transitional solution. Originally, together with the General Data Protection Regulation, another new regulation on data protection was set to come into force, the EU's E-Privacy Regulation. However, on 23 October 2017 the EU parliament decided that this timetable could hardly be stuck to. Further information on this can be found on the official EU website. Therefore it is too early at the moment to give any serious thought to the e-privacy regulation – it is unlikely to take effect before 2019. Nevertheless, website operators and online retailers should definitely keep an eye on the e-privacy regulation. In contrast to the GDPR, which regulates principles of data protection law, the e-privacy regulation will relate to a very special area: the protection of privacy in everyday digital life. This is where website operators are expecting further regulations.
But what actually changed in May 2018? Here are the most important changes in the EU's GDPR for website operators:
A number of points have already been explained in previous sections. The two themes of a data protection declaration and coupling of consent forms are described below. These mainly concern website operators.
There should be a strict difference between data protection consent and data protection declaration. The user's consent – required for any data processing that is not permitted by a legal norm – refers to the active confirmation by a user that he or she agrees with the company's data protection conditions. The data protection declaration is within the text in which a company presents its data protection measures to its customers. It is something which is obligatory on every website.
For website operators, the most important new feature of the GDPR is the privacy policy. Art. 13 Par. 2 of the GDPR contains a detailed catalogue of information which must be contained within a data protection declaration. The overall form of the data protection declaration is also more clearly regulated in the GDPR. It must be written in comprehensible language and understandable when it comes to the content. The General Data Protection Regulation attaches great importance to transparency.
“The controller shall take appropriate measures to provide any information […] relating to processing to the data subject in a concise, transparent, intelligible and easily accessible form, using clear and plain language” (Excerpts highlighted by author)
- Art. 12 Par. 1 of the GDPR ‘Transparent information, communication and modalities for the exercise of the rights of the data subject’ (Source: www.privacy-regulation.eu/en/article-12-transparent-information-communication-and-modalities-for-the-exercise-of-the-rights-of-the-data-subject-GDPR.htm)
On the other hand, experts see the prohibition of linking consent forms as the greatest restriction imposed on the network industry by the GDPR. It means that a web page operator may not subject its potential customers to the future release of data, which is not necessary for the current service. For example, if you are required to sign up for an online newsletter in order to conclude a contract, this will now be a violation of EU law. The most important thing is that there is nothing forced, and such measures are always voluntary. Up until now, many linked consents are unlikely to have been voluntary. Therefore any consent obtained in this way is invalid.
“When assessing whether consent is freely given, utmost account shall be taken of whether, inter alia, the performance of a contract, including the provision of a service, is conditional on consent to the processing of personal data that is not necessary for the performance of that contract.”
- Art. 7 Par. 4 of the GDPR in relation to ‘Conditions for consent‘ (Source: www.privacy-regulation.eu/en/article-7-conditions-for-consent-GDPR.htm)
Finally, it is imperative that you observe the changes to documentation requirements, consent bases, storage, information rights, and the right to deletion. It should also be remembered that other new regulations may also affect website operators and companies.
Even if you met the deadline for the new European General Data Protection Regulation, it is important that you are aware that the measures required vary from company to company. This means you can check what you have done, and update as necessary. There are a number of precautions that every company should take into account. These precautions have been summarized here in a GDPR checklist for you.
✔ Establish documentation processes for handling personal data.
✔ Set up a list of processing operations.
✔ Establish communication methods for any customer inquiries on data protection.
✔ Check whether you need to appoint a data protection officer.
✔ Adapt your website's privacy policy to the new regulations.
✔ Consult with the head of your technical department and the data protection officer to determine whether the current technical measures for data protection are sufficient. Under certain circumstances, further measures may have to be undertaken or existing measures may need to be better integrated into the IT infrastructure.
✔ All personal data collected which violates the coupling of consent rules must now be collected differently and seen as voluntarily provided data.
✔ If you have commissioned external service providers to be in charge of handling your company's personal data, you should clarify with them whether the agreements made correspond to the data protection reform. If necessary you can adjust the agreements to the new specifications. Check how you obtain the consent of your customers in your online shop and adapt the procedure to the GDPR.
✔ Stay up to date when it comes to e-privacy regulation. This will legislate how online retailers deal with analysis and tracking tools in the future.
✔ If you are at all unsure about anything, make use of relevant professional advice.
As is to be expected with such an extensive and wide-ranging change to an already huge and complex issue, the reaction to the new GDPR has been quite mixed. Some have welcomed its introduction, praising its comprehensiveness and transparency. Others have criticized it, noting the very high fines and strictness of some of the legislation. Below we have highlighted a few quotes from experts in the industry who had something to say about the European General Data Protection Regulation.
"The change in EU data laws is a significant breakthrough in how online organizations will engage with consumers and end users. The last 2 or 3 years have seen major changes in attitudes to how online data – such as personal information, browsing history, purchase and transaction history – is used, stored and shared.”
- Simon Moffat, Solutions Director, ForgeRock (Source: https://www.cbronline.com/public/5-tech-reactions-to-the-eu-data-protection-regulation-4756923/).
"This regulation is set to really shake things up forcing companies to scrutinize how they process and handle data. In particular, the ruling that they must report breaches 'that are likely to harm individuals' has the potential to expose a swathe of breaches that are currently being swept under the carpet – and the corresponding fines are likely to be keeping a few CFOs awake at night!“
- Tony Pepper, CEO, Egress Technologies (Source: https://www.scmagazineuk.com/breaking-news-eu-agrees-4-fines-breaching-data-protection-regulations/article/1476943/).
"The latest agreements on EU data protection rules should raise a red flag to all components of the data supply chain. Far beyond the traditional realms of financial penalties, this latest development could threaten businesses’ viability."
- Steve Murphy, SVP, GM EMEA, Informatica (Source: www.itproportal.com/2015/12/16/new-eu-data-protection-rules-industry-reaction/)
“We regret that much of the ambition of the original data protection package was lost, due to one of the biggest lobbying campaigns in European history. However, we congratulate the European Parliament and, in particular, the successful Luxembourg Presidency of the EU last year, for saving the essence of European data protection legislation.”
- European Digital Rights (Source: edri.org/press-release-data-protection-and-passenger-name-record-package-to-be-voted-on-tomorrow/)
The possible consequences of the GDPR have been the subject of heated debate for years. Since May 25th 2018, some of the positive as well as some of the negative predictions seem to have come true. Here you will find a brief overview of all past developments in connection with the GDPR that affect companies and/or consumers:
Both the German digital association Bitkom, as well as “forsa Gesellschaft für Sozialforschung und statische Analysen mbH” which conducts market, opinion and social research, independently concluded that almost three quarters of German businesses alone were not prepared to implement the GDPR – the picture is unlikely to change wider across Europe, or globally. Small and medium-sized enterprises in particular currently have a lot of catching up to do. This could theoretically be reflected in their economic performance, but precise statistical findings are not yet available at this time. Digital-native companies such as Facebook, on the other hand, have apparently survived the changes unscathed thanks to a budget of millions and concentrated technical expertise and are now even using the GDPR to promote themselves. Google, for example, is currently declaring that it has spent the equivalent of “500 man-years of work” to implement the new data protection measures.
As has been shown time and again in recent months, the GDPR is creating confusion across the globe. Instead of adapting their own data protection guidelines to the new European regulations, many companies and news sites simply block users with European IP addresses, or reduce the information offered or only activate it for an additional charge. In addition, many small websites have been taken off the Internet for fear of fines and have not been online since. These developments play a direct role in the "data flight" scenario feared by many critics of the GDPR.
At the same time, the change that came with the GDPR has triggered an international discourse on the subject of data protection, which - as data protection activists agree - was long overdue to this extent. Large Internet companies such as Google and Facebook are now more frequently the focus of media attention and are also being critically observed by their users.
Instead of orienting their own data protection guidelines to the GDPR, many US companies and news sites such as the New York Daily and Chicago Tribune are blocking users with European IP addresses, reducing the information offered or only activating it for an additional charge. However, according to the error messages that appear on many of the websites during the visit, it is currently being examined whether the services can continue to be made available to European interested parties.
The GDPR continues to cause confusion in many places. Although the concrete changes in the legal text are only minor, the fear of the consequences of disregarding the legal situation has increased. SMEs in particular express their fear of warnings, small bloggers and forum operators have taken their web projects off the net. However, it was found that many of these sites have only temporarily disappeared - publishers want to check their own data protection efforts in relation to the GDPR before going online again. In any case, the dreaded "wave of warnings" seems - at least for the time being - to be absent. This means that no widespread abuse of the GDPR for targeted warning fraud has yet been recorded.
The great "warning wave", which many economic players feared for a long time, continues to prove to be a phantom. Nevertheless, since January 2019 more and more e-mails with reminders have come into the mailboxes of many companies. This could cause a confusion between the e-mails that contain dangerous malware in the attachment and should therefore quickly be classified as spam and deleted, and the ones that are still trying to update their customers or readers.
Read more about email fraud and phishing in the 1&1 IONOS Digital Guide.
Although the fear of a wave of warnings turned out to be exaggerated, in December 2018 German authorities released numbers of complaints regarding data privacy, as did authorities in other European countries. Numerous indications of violations of the GDPR in companies were received by the data protection officers.
The authorities in Europe had unofficially agreed on a temporary "buffer period" during which no penalties were imposed. But that is now over: In November 2018 the social media service provider Knuddels.de had to pay a fine of 20.000 Euro after it had stored passwords and e-mail addresses in an unencrypted format, meaning data leaks or hacks would’ve been all too easy.
Furthermore, France’s data protection regulator CNIL fined Google the sum of €50 million ($57 million), considered to be a landmark in the GDPR ruling. This shows that authorities are willing to fine – and it looks like the sums of money are becoming increasingly significant.
For-and-against arguments on the GDPR continue to balance each other out. Some voices speak of unnecessary scaremongering and call the many website closures over cautious, others people expect that this may just be the beginning of a new age of data protection. There are many different implications to the new regulation, spanning from a professional level to a personal one. Regardless of personal opinion, however, seeing as the GDPR is now in action, it is essential that you wise up and ensure your website or other online presence conforms to the new regulations.
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