Data Transfers and a Chaotic Post-Brexit Future

european unionLast week, the Irish High Court made a judgement on transatlantic data flows that could have far reaching implications for US tech firms and point the way towards economic disaster for the UK.

Yes, it might not have received much coverage at the time, but the court’s decision was a biggie.

It asked the European Union Court of Justice (CJEU) to scrutinise the mechanism by which Facebook and many other firms transfer data: standard contractual clauses (SCCs).

Why? Because Austrian law student Max Schrems is still not happy that his personal data could theoretically be snooped on by the US authorities whilst residing in Facebook datacentres over there. His previous battle with Facebook over this issue led to the collapse of the Safe Harbour agreement between the EU and US.

Its replacement, Privacy Shield, is the other main legal mechanism – aside from SCCs – that govern data transfers outside the US.

“In simple terms, US law requires Facebook to help the NSA with mass surveillance and EU law prohibits just that,” Schrems said in a written statement following the court’s decision. “As Facebook is subject to both jurisdictions, they got themselves in a legal dilemma that they cannot possibly solve in the long run.”

Emily Taylor, CEO of Oxford Innovation Labs and Chatham House associate fellow, took time out to discuss the issue with me.

“The reference to the CJEU is no surprise, and the fact that the US government applied to be joined as party shows how high the stakes are on all sides – for governments, for big data platforms like Facebook, and for individuals,” she told me.

“The case shows that the Snowden revelations continue to reverberate on both sides of the Atlantic.  The CJEU has taken a consistently hard line against mass data collection and retention, and increasingly relies on the EU Charter of Fundamental Rights. The Charter allows for ‘more extensive protection’ of fundamental rights such as privacy, compared with the more familiar European Convention.”

That spells some uncertain times ahead for Silicon Valley, especially with Privacy Shield also facing an uncertain future.

That’s not all though. The case tells us much about what may happen to post-Brexit Britain.

Our digital economy is worth around £160bn and responsible for over 1.5m jobs, by some estimates. That makes it a vital part of the economy, and means unhindered data transfers with the EU – our biggest trading partner and the largest trading bloc in the world – are absolutely essential.

So how do we square the EU’s requirements around strong privacy protections for citizens, with the round hole of the UK’s brand spanking new Investigatory Powers Act? Also known  as the Snoopers’ Charter, the new law has given the UK authorities probably more power than any country on earth – save for China and North Korea – to snoop on their own citizens.

“It is difficult to see how the UK’s mass data collection requirements under the Investigatory Powers Act could satisfy the EU Charter and this could have a severe impact on EU-UK data flows, potentially damaging UK business interests post-Brexit,” Taylor concluded.

That should be getting people in all sorts of high places very nervous indeed.

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LinkedIn and the cost of doing business in China

great wallA few weeks ago I covered the launch of LinkedIn in China. It’s been available in English there for a while now and has even managed to amass around 4 million users, I’m told, but this was a big deal because it could give the firm access to up to 140 million Chinese professionals.

That said, many questions remain unanswered about the move, and I’ve been doing a bit of digging to explore them.

The most important centre around exactly what LinkedIn will have to sacrifice to remain unblocked by the Great Firewall. We all know the likes of Facebook, Twitter and YouTube have been forbidden for years by China’s censorship apparatus, but is the cost of doing business there actually worth the potential damage to reputation and bottom line?

Well, CEO Jeff Weiner had this to say about the compromises it has had to make:

As a condition for operating in the country, the government of China imposes censorship requirements on internet platforms. LinkedIn strongly supports freedom of expression and fundamentally disagrees with government censorship. At the same time, we also believe that LinkedIn’s absence in China would deny Chinese professionals a means to connect with others on our global platform, thereby limiting the ability of individual Chinese citizens to pursue and realise the economic opportunities, dreams and rights most important to them.

To me this seems a little disingenuous. Would Chinese citizens’ lives really benefit so much from a local language version of LinkedIn, or is this all about the money?

“I think the CEO should be more upfront about what exactly he is talking about in this situation,” Charlie Smith, co-founder of anti-censorship body Greatfire.org, told me. “What he means to say is that in order for them to get a business license to operate in China so that they can start to sell advertising and recruitment notices, the Chinese authorities insisted that they self-censor.”

The problem is we still don’t know exactly what LinkedIn has agreed to censor. Surely a pre-requisite for getting the green light from Beijing’s censors is having a plan on exactly what will be monitored, and how many resources will be spent on human censors, filtering technologies, etc? Well, LinkedIn told me the license is still pending, and so it can’t be more specific on the details.

But it gets more complicated. Will, as Smith asked me, the profiles of certain rights groups or individuals be removed by LinkedIn, if requested? What if a Chinese user wants to connect with a rights group or dissident outside China? One presumes the firm will have to create some kind of internal firewall between Chinese users and those outside the Chinternet. Aside from the cost to the bottom line, this has all the ingredients for a potential PR disaster.

“How are they going to ‘protect’ Chinese users from seeing content that is being posted by people outside of China that they are connected with? When this kind of censorship comes to light, many people will start testing the LinkedIn platform to see how far this censorship will go,” Smith argued.

“Most people only use LI when they are looking for a job, so I would imagine that many professionals, upon hearing about this complicit censorship, will simply leave the platform and use traditional job boards for their employment search.”

I also spoke to Lucy Purdon at rights group the Institute for Human Rights and Business, which urged more transparency from LinkedIn and encouraged the firm to reach out to the ICT industry and civil society as a member of the Global Network Initiative.

Purdon added:

LinkedIn should learn from the experience of other ICT companies operating in China, especially where government requests for user details present particular risks to users and conflict with the company’s commitment to respect internationally recognised human rights.

In the post-Snowden fallout, LinkedIn has filed legal challenges in the US, seeking permission to provide greater transparency of the number of national security requests they receive from the US government. Given that, at the very least we would expect LinkedIn to push for the greatest transparency in China and include requests from the Chinese government in their transparency reports, which provides a country by country breakdown. In addition, LinkedIn should consider expanding the categories to include censorship requests.

Now this is just the opinions of two organisations. But they’re valid ones and highlight the problems facing any social media or user-generated content-heavy company trying to do business inside China. It’ll be very interesting to see just how LinkedIn handles these issues as it expands its beta service behind the Great Firewall.


China ready to lift the Great Firewall. Maybe. In part of Shanghai

chinese flagReports emerged from China today that at first sight seem almost unbelievable: the Communist Party about to lift the Great Firewall and unblock access to Facebook, Twitter and a host of other banned sites.

Then the small print. If the anonymous government sources are speaking the truth, it will be only be relevant to Shanghai Free Trade Zone, a 28 sq km pilot project designed to encourage greater foreign investment in China and open its economy up to the international markets.

“In order to welcome foreign companies to invest and to let foreigners live and work happily in the free-trade zone, we must think about how we can make them feel like at home,” one government source told the South China Morning Post.

“If they can’t get onto Facebook or read The New York Times, they may naturally wonder how special the free-trade zone is compared with the rest of China.”

Now while that seems fair enough, the Communist Party isn’t known for its love of unfettered access to the internet – after all the free flow of information online is precisely the sort of thing which it knows will lead to its demise.

So what’s this all about? Well, a few things sprung to mind:

  • China is in the middle of one of the worst crack downs on online freedom anyone can remember, so don’t expect this localised liberalisation to spread anywhere else in the Middle Kingdom. The party is very much still for the suppression of any discussion it deems “harmful”.
  • Even if the Great Firewall is lifted in the Shanghai zone, doing so from a technical standpoint will take time, according to Forrester analyst Bryan Wang.

“The network within the free trade zone will exist something like an intranet, which is connected to the international backbone without going through the Great Wall firewall,” he told me. “Current infrastructure will not be enough to support the future development. China Telecom or Unicom will need to lay out new fibre in the free trade zone.”

  • The Party giveth and it taketh away. Nothing is confirmed yet, and until state-run media reprint the story, we can probably take it as just a rumour, possibly one designed to increase international publicity for the zone, which is a pet project of new premier Li Keqiang.

    The whole free trade zone itself is only a pilot, so we can expect Beijing to bring the Great Firewall crashing back down on the region if its censorship-free internet policy backfires.

On a side note, how will Hong Kong react to the free trade zone?

If the Shanghai pilot is successful, more of them could spring up across China, effectively stealing its thunder as the only truly outward facing, economically liberalised, online censorship-free region in the Middle Kingdom.

Although a free and unfettered internet may soon no longer be a differentiator for Honkers, however, it’s likely that its superior IP protection regime, rule of law and business friendly visa system will still tip the balance in its favour for most MNCs.