All over Europe organisations of all sizes are currently scrabbling desperately to get their house in order for 25 May 2018. What happens then? Only the biggest shake-up to Europe’s data protection laws in nearly a generation. The implications are immense, both in terms of the scope of the new regulation and the companies who will now be held liable.
There’s just one problem. The UK’s Snoopers’ Charter, or Investigatory Powers Act. Its enshrining into law of mass surveillance powers could create major problems down the line, possibly putting UK firms at a competitive disadvantage precisely at a time when they need the digital economy most.
What’s the problem?
Let’s start at the beginning. UK firms will have to comply with GDPR, even with Brexit looming. That’s because the extrication of the country from the EU will take at least two years from whenever Article 50 is triggered – presumably in March – and probably much, much longer. And even beyond that, the UK government has said in its Brexit white paper:
“The European Commission is able to recognise data protection standards in third countries as being essentially equivalent to those in the EU, meaning that EU companies are able to transfer data to those countries freely.
As we leave the EU, we will seek to maintain the stability of data transfer between EU Member States and the UK.”
This implies that the UK will broadly speaking harmonise its laws with the GDPR. But the bulk data collection powers granted by the IPA mean the regime is certainly not equivocal to that in Europe. Emily Taylor, CEO of Oxford Innovation Labs and associate fellow of Chatham House, told me that the European Court of Justice (CJEU) shows no signs on shifting its stance on bulk data collection – having recently ruled against the forerunner to the Snoopers’ Charter, DRIPA.
“Other elements of the judgment are likely to cause problems with the Investigatory Powers Act: the CJEU says that targeted data retention may be allowable, but must be restricted solely to fighting serious crime; warrants must be signed off by a court, not a minister; and the data concerned must be retained within the EU. All these will potentially conflict with core elements of the IP Act,” she told me.
If its kept as is, the Act could therefore impact the legality of data transfers between Europe and a newly independent UK, which will be bad news for most firms reliant on a thriving digital economy.
“The impact of conflicts between the GDPR and our Investigatory Powers Act may be to hamper the competitiveness of UK tech, particularly as the GDPR seeks to protect EU citizens’ data wherever it will be processed,” she argued.
Not great for America
This is a hot button issue for Europe In fact it’s the reason why data transfers to the US were put under threat after Safe Harbour was torn down because of fears of US authorities snooping on Europeans’ data. Despite a new agreement – Privacy Shield – being put in place, there could still be bumps in the road ahead.
“Transatlantic data flows will not be legal unless there is a robust framework in place to offer EU citizens’ data equivalent protection to what is enjoyed in the EU,” said Taylor.
“President Trump’s ‘America First’ policy is likely to renew tensions over Privacy Shield – a shaky compromise which was hurriedly reached following the CJEU’s obliteration of its predecessor ‘Safe Harbour’.”
KPMG’s globa privacy advisory lead, Mark Thompson, told me that firms outside of Europe that need to comply with the GDPR are better off keeping data on European citizens inside the EU so as not to fall foul of any changes to data transfer agreements.
“Despite the USA and EU having some cultural alignment, there is potential for significant culture clash between the EU’s view of a fundamental human right to privacy and the US view on what constitutes privacy, which is significantly different,” he added.
We’ll have to wait a while to see what the fallout of all this is. But with the UK government unlikely to countenance any changes to the IPA, there could be some potentially bad news for the country’s digital economy in the next few years if nothing changes.
It’s hard to find an optimist in the cyber security industry in these post-referendum days. I spoke to a fair few for an upcoming feature for Infosecurity Magazine and the consensus seems to be that a Brexit will be bad for staffing, the digital economy and the financial stability of UK-based security vendors.
That’s not even to mention the legal and compliance implications. Chatham House associate fellow, Emily Taylor, recommended firms continue on the road to compliance with the European General Data Protection Regulation. Aside from the fact that any firms with EU customers will still need to comply with the far-reaching law, she reckons that if we want to protect the free flow of digital information between the EU and UK, we’ll need to continue following European laws in this area.
Snoopers gonna snoop
However, a Brexit would cause other problems, notably in that the current Snooper’s Charter looks like it will enshrine in legislation the principle of bulk surveillance – the very thing which effectively led to the scrapping of the Safe Harbour agreement between the US and EU. If this bill goes through as is and we go out of Europe but stay in the single market, we’ll have to change that bit, Taylor told me.
“A case brought by David Davis and Tom Watson questioning the legality of bulk surveillance powers under the old DRIPA laws is currently being considered by the CJEU,” she explained.
“It’s not clear which way the CJEU will go on this, because many member states have lined up to support the British approach. However, if CJEU follows its recent decisions, it could strike down bulk data collection. If we wanted to stay in the single market, we’d have to amend our IP Bill in response.”
Even if we broke away from Europe completely and adopted the status of a “third country” like the US, we’d still have to adopt measures “to give equivalent protection to EU citizens’ data as they enjoy within the EU,” she argued. And bulk surveillance would certainly be a no-no in this scenario.
The uncertainty – which could continue potentially for years while Brexit deals are worked out – is also viewed by many as damaging to the cyber security industry, and tech in general. Immigration lawyer and partner at MediVisas, Victoria Sharkey, claimed firms may be unwilling to employ skilled workers if there’s a chance they might have to leave in a couple of years’ time.
“This is certainly going to be the case where significant training and investment is involved,” she added.
In fact, EU nationals are apparently already packing their bags.
“I am already seeing EU nationals who have been here for years make plans to leave and either go home or go to another EU country. They are worried for their jobs, are worried that they will be told to leave and so would rather leave on their own terms, and they are also being made to feel unwelcome,” Sharkey continued.
“I feel that when we do leave that it is going to become significantly harder for UK employers to encourage the best in their industry to come and work in the UK.”
This, for an industry which has always struggled with skills gaps and shortages, is potentially catastrophic.
Can we overcome?
Philip Letts, CEO of global enterprise services platform blur Group, has run businesses in Silicon Valley and the UK. He also pointed out the potential damage that political and financial uncertainty could have on the industry.
“The politicians are in unchartered territory. We don’t yet have a clear timetable for the triggering of Article 50, nor the trade deals that are going to have to be negotiated. There is a political vacuum. Business confidence is low and many will hunker down, try to avoid risk and wait for this to play out,” he told me.
“Globally, the US tech heavyweights will want to remain in the UK and the EU, and they will do both, operating across different European centres. But the EU market is more lucrative than the UK, so things may shift over time.”
So is the tech and cyber security sector really doomed? Not so, according to KPMG UK head of technology, Tudor Aw.
“I believe the resilient UK tech sector can withstand the challenges of Brexit and thrive,” he told me.
“Technology is increasingly a key sector that underpins all other sectors – whether it be back office systems or strategic enablers such as IoT and data analytics. Companies will need to invest in technology to drive efficiencies and strategic growth – one only has to look at developments across a diverse range of sectors such as healthcare, automotive, property, retail and the military to see that technology spend will only increase regardless of Brexit.”
It’s a moot point now, but I wonder how much better it could have thrived had we not voted out on 23 June.