Data regulations block Digital Single Market vision, warns Eurocrat-in-charge

The question of free movement of data is one that has vexed transatlantic business relations between the US and the European Union (EU), as well as being an issue that needs to be addressed in the context of the ongoing Brexit negotiations.

But away from both of those issues, the freeflow of data - or lack thereof - is also holding back the EU vision of a Single Market. Who says so? Well, for once, not a Eurosceptic of any kind, but the Digital Single Market Commissioner Andrus Ansip.

Ansip made his declaration in Tallinn, Estonia in a Digital Single Market conference on the free movement of data, during which he called for - brace yourselves! - a reduction in data protection legislation.

Actually that’s not as radical a proposal from a Eurocrat as it might sound at first. What Ansip is objecting to is national regulations requiring in-country data centers. What he wants is a Brussels-centric world order where no such localised legislation exists. He said:

Keeping [data] unnecessarily stuck in national data centres or in a certain geographic area means that it cannot be used to its full potential. It means that data cannot be easily traded, exchanged or re-used in new imaginative ways.

This is holding up the Digital Single Market. It is holding up small and medium enterprises and startups from scaling up and expanding. It is holding up our progress in fast-growth sectors like the Internet of Things and cloud computing services. I would call this is a waste. And an expensive waste as well.

The core of the problem remains the same: national requirements on processing, storage and transfer of data. You could also call them data protectionism, or data nationalism. Digital borders, or a non-tariff barrier to trade. But whatever their name, rules forcing data to be stored unnecessarily within national territory do not make sense in the Digital Single Market. There is no place for them.

He added:

The real value of data will only come out if it can be used to the full. That will lead to more development of the data economy, bringing more growth and jobs. Take the huge potential in geographical and weather information, traffic data, general statistics, data from publicly funded research projects, and certain books from libraries. All this data can be re-used in new products and services, in both the public and private sectors. It can stimulate new markets, businesses and jobs by adding innovation value to the data that was gathered in the first place.

He cited the example of Swedish automotive company Scania, which now has a quarter of a million connected vehicles around the world which can deliver vast amounts of data in real time to the truck owners:

Most of this is commercial data, but there is a lot of other useful data that is collected: weather, road and traffic conditions. This data has a lot of potential for re-use and does not necessarily have any direct commercial value for the truck owners or for Scania.

Our task now is to incentivise private companies to make these types of general interest data available for public administrations or even startups to use. Imaginative re-use of data is something we should encourage and facilitate more widely, within and between other sectors. But that will not happen if data cannot flow freely and smoothly, nationally and internationally.

Action plan

The Estonian presidency of the EU has proposed making free movement of data a new basic principle in EU law. Ansip said the Commission is also working on other principles, such as availability of data, even when it is stored in other EU countries, when public authorities need it, such as for taxation or business register purposes, for example.

There are two specific issues that need to be addressed, Ansip posited:

The first is a lack of legal certainty about applicable rules and practices when it comes to data movement, outside the situations covered by the General Data Protection Regulation. The result? Data localisation becomes the default option. We want to avoid this.

The second is a lack of trust in cross-border storage and processing of data.Unfortunately, the result is the same. Data localisation again becomes the preferred option, for both public and private sectors.

And in case anyone was thinking that this is an internal matter for EU nations, Ansip had one last idea to float that would impact on US cloud services providers:

We are looking into improving the situation for switching cloud service providers. The main idea is that the user should be able to transfer data fast and without re-entering it manually. Commission experts are now working on an impact assessment, which is a necessary step before making any legal proposal. On that basis, we would prepare such a proposal, with the aim of presenting it this autumn.

So nobody can say they haven't been warned...

My take

Sorting out today's situation would send a clear political message that Europe is open for business.

That’s the all-important ‘not protectionism’ boilerplate that goes on the end of any Brussels speech around data transfer or data protection issues. Ansip makes some valid points in his speech, although many will remain inherently nervous about the idea of Brussels being able to dip into data stored anywhere in the EU “when public authorities need it”.

Whenever a bureaucrat is given additional powers, he or she will always, without fail, find cause to 'need' to use them. There’s no reason to assume that this situation would be any different. There needs to be some clearly-defined checks and balances in place before this principle is going to work in practice.