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AGENDA
○ Europe’s new online rules are expensive, burdensome,
and all too likely to impede innovation
THE BLOOMBERG VIEW
For more commentary, go to
bloomberg.com/opinionILLUSTRATION BY ARINA SHABANOVA
The European Union is embarking on an expansive efort to
give people more control over their data online. The 260-
plus pages of the General Data Protection Regulation are
well-intentioned yet largely wrongheaded as they articulate
dozens of goals in the service of “a strong and more coherent
data protection framework.”
Meeting these ambitions will be the job of companies—
wherever they’re located—that process the data of EU citizens.
Among other things, companies will need to obtain consent,
explain how data will be used, allow people to see what’s
been swooped up, and permit them, at any moment, to with-
draw their consent or to demand that their data be deleted.
Given the backlash against data collection—and support for
the GDPR’s stated goals—this approach might seem reason-
able. But look more closely, and the drawbacks are glaring.
Most obvious are the costs. By one estimate, multination-
als will spend $7.8 billion preparing for the GDPR. Surely
Facebook Inc. and Google can aford such costs, you might
say. Yet this, too, is a problem: The GDPR is likely to advantage
big tech companies at the expense of smaller ones. Few small
businesses will be able to fully comply with these rules, while
many of themwill sufer from having less efective advertising.
TheWrongWay onData
Europe’s dearth of notable startups will hardly improve.
Worse, the rules could impede innovation. Blockchain
companies could be shut out entirely. Cloud computing may
become much more complicated. Artiicial intelligence could
in many cases be incompatible with the GDPR’s mandates.
While this is more or less by design, there will also be
unintended consequences. Although the GDPR aims to
improve data security, its privacy rules may compromise a cru-
cial tool used by security researchers, thereby increasing spam,
phishing attacks, and malware. Its compliance costs could
inhibit cybersecurity investment. Its emphasis on obtaining
consent for data collection is, in practice, likely to mean end-
less “click to proceed” boxes that leave customers little more
informed—and signiicantly more irritated—than before.
The EU deserves credit for attempting to resolve a real
problem. European law enshrines a right to privacy. Yet the
digital economy depends on invasive data collection. The
GDPR reveals a worldwide tension: People have come to
expect free online services as well as unencumbered privacy.
Unfortunately, they can’t have both.
No solution can be universal. But in general, the goals
should be transparent pricing and more competition. The
GDPR’s requirement that personal information be “portable”—
that a user can take her data from one service to another that
treats it more responsibly—is on the right track. It would be
even better to encourage companies to explicitly charge for pri-
vacy, which would give users a better sense of what their data
are worth and ensure their consent is more informed.
The new U.S. embassy in Jerusalem opens on May 14. In
response to the embassy’s relocation from Tel Aviv, the
Palestinian National Authority has ceased participating in
U.S.-brokered peace talks with Israel. President Trump, who
won’t be in attendance, said he’s “very proud of” the move.
⊲ Germany publishes
preliminary first-quarter
GDP figures on May 15. The
data are expected to show
the euro area’s linchpin
economy cooling.
⊲ U.K. Prime Minister
Theresa May will discuss
her proposed EU
“customs partnership”
after delaying for a week
to rally cabinet support.
⊲ Investors will be watching
Tencent Holdings’ May 16
earnings report for evidence
of continued shrinkage in its
profit margin.
⊲ The U.S. Army Corps
of Engineers pulls out of
Puerto Rico on May 18,
leaving the island’s battered
electric authority to keep
rebuilding on its own.
⊲ The top economic adviser
to Chinese President
Xi Jinping, Liu He, will visit
the White House to continue
trade negotiations.
⊲ The Cannes Film Festival
continues through May 19
with a fresh emphasis on
gender equality and a jury
led by actor Cate Blanchett.
⊲Next Week in Jerusalem
Bloomberg Businessweek
May 14, 2018