Transatlantic divide on digital policy

In the wake of recent European Court of Justice decisions on privacy, and ongoing, divergent debates in the US and EU over net neutrality and copyright, are we about to end up with two markets divided by legislative approaches to the internet?

Many think the possibility is growing of two differing jurisdictions, which will offer headaches and more complexity. However, there could be fresh opportunity for European businesses, too.

The April decision by the ECJ to throw out Europe's 2006 Data Retention Directive as well as the more recent ruling that Google is a data controller subject to national data protection laws in Europe which also can be forced to remove limited types of content on request, indicated the EU will prioritise personal privacy over certain business or government security arguments.

Many legal experts believe the Google case confirmed an existing, limited “right to be forgotten” or “right to erasure” for Europeans online, a right being pushed for more formally at the moment in a proposed new data protection regulation in Europe.

The Google decision has split opinion worldwide. "I very much think you cannot regulate a tool, and Google's a tool. I think the ECJ has made a bad ruling," argues Joe Haslam, executive director of the Owners & Entrepreneurs Management Program at Instituto de Empresa Business School in Madrid, and the co-founder and chairman of hotel booking app start-up Hot Hotels.

But at the same time, he notes that Google makes more money in Europe than in the US, “so the EU has far more strength if it wants to stand up to Google”.

John Breslin, a lecturer at NUI Galway and researcher in the area of the semantic web, feels that technically, a right to be forgotten could be very difficult to ensure, even with the ongoing online evolution towards the semantic web, where data will carry identifying tags, making it easier to find and manage it.

“The semantic web I suppose could be used to link various identities to have them removed, but when someone makes a request to have information removed, it’s quite difficult.” Because of the nature of the web, information has often been shared, quoted, or commented upon, becoming part of others’ online data.

Removing images may be even more difficult – a tag can be removed from a photo, for example, but the image might remain. Plus, people post images they've taken of others – who then owns or has the right to manage the image, he asks. Setting the stage However, John O'Connor, partner and head of the technology and commercial contracts group at Matheson, sees the ruling as a significant pro-privacy ruling that sets the stage for further development of a right to be forgotten.

However, he says he thinks most commentators are missing the true impact of the ruling. “The right to erasure is important, but it’s the justices’ other point that is really groundbreaking, that search engines are data controllers and are established as such in a country by virtue of having a subsidiary there”, even if the firm is based elsewhere, such as in Silicon Valley.

This means such companies, and likely many others, are now subject to European data protection laws, “which is very significant. Suddenly, now, because of the extraterritorial effect of European data protection law, you can be subject to that law”.

He expects a much strengthened data protection regulation to come out of current discussion in the EU as well. Will that cause the US market to operate separately from the EU? “I think there is a risk of that. However, I think the European model, which has a higher level of compliance, particularly with data protection, will be the model deployed [internationally] over time.” Europe, he says, “will be setting the agenda” in data protection. He believes the existing “safe harbour” agreement between the US and EU for handling data will be seen as increasingly untenable.

In addition, US companies face a dilemma in handling US data.

“I think it might become more difficult for US multinationals to say to their US customers that they’re treating European data at a higher standard than US data.”

He warns that as a result of the privacy rulings, companies will incur greater data management and compliance costs.

“But getting it right will give a competitive advantage,” he adds.

Haslam is less concerned about the privacy rulings than other recent developments that may set the US down one path, and the EU down another.

“Wearing my entrepreneur hat, I’m far more worried about net neutrality and the copyrighting of APIs [application programming interfaces, the software code “hooks” on big company applications to which developers can attach their own third party applications] than the privacy decisions,” Haslam says.

Net neutrality is a policy that treats all online data transfers, no matter the size, in the same way. Proponents argue that companies and consumers should not have to pay extra to use or offer higher bandwidth services.

The EU has voted in support of this principle, supported by most in the technology industry. The US Federal Communications Commission (FCC), on the other hand, indicated last week that it supports internet service provider proposals to allow internet "fast lanes".

On net neutrality, Haslam says Europe should be lobbying strenuously against moves by the FCC to allow broadband providers to charge at different rates for various levels of data speed and capacity. The shift in US internet policy away from de facto net neutrality towards a divided, fast-lane approach came during an FCC vote last week. Haslam says the change is down to a small handful of influential people pushing politicians and FCC members to legislate against net neutrality. Copyright The API issue is the result of a long US court battle between Google and Oracle, in which the US court has indicated that APIs can be copyrighted, forcing developers to pay to create add-on applications and services.

Software shouldn’t be open to copyright in the first place, Haslam argues. But if the US decides to go that route, then European businesses might have the opportunity to offer EU-based hosting on servers which keep software APIs open, a move that would appeal to many developers, and companies in the US.

“There’s huge opportunity, in one way. But that would be playing dirty.”

He tends to think such growing EU/US policy differences will likely be resolved one way or another.

“It’s not really in the interest of the US to fall out with the EU,” says Haslam.

But, if that does happen, "It would be a right mess for both Ireland and Britain. We both prosper from being between [the US] and [the EU]."