European Privacy Proposal Lays Bare Differences With U.S.

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BERLIN -- Europe's push to extend consumer protection to the digital economy has become the target of what observers are calling an unprecedented lobbying assault in Brussels by Silicon Valley technology companies and the U.S. government.

All the major U.S. tech companies have directed their Brussels-based lobbyists to follow the proposals as they work their way through the European Parliament. Together, the new laws could give 500 million consumers the ability to block many forms of online Web tracking and targeted advertising.

But in an unusual display of direct diplomacy, the U.S. Commerce Department is also lobbying on behalf of the Obama administration, which is concerned that sweeping new privacy controls could hurt the U.S. tech industry in Europe.

So it was no surprise when three U.S.-based representatives of the American Civil Liberties Union, the Consumer Federation of America and the Friends of Privacy U.S.A, an offshoot of the London-based Privacy International, weighed in themselves during the past week with a different message: Europe needs to pass tough new restrictions to save the digital economy, not destroy it.

The proposal, made last February by Viviane Reding, the E.U. justice commissioner, has brought into the open how much Europe and the United States differ on privacy rights and their role in the digital economy.

Barry Steinhardt, the chairman of Friends of Privacy, founded just last year, called it a "titanic clash."

"The rest of the world is looking to see who will prevail because the Asians, Latin Americans and Africans all need to do business with the U.S. and Europe," Mr. Steinhardt said. "So this is extraordinarily important for Americans."

Mr. Steinhardt, Susan Grant, the director of protection for the consumer federation, and Ben Wizner, a lawyer who focuses on speech, privacy and technology at the A.C.L.U., met with a handful of European members of Parliament. They included Jan Albrecht, a German lawmaker who is the prime sponsor of the proposal, and Sean Kelly, an Irish conservative who has sponsored amendments to allow global businesses to continue with unfettered data mining in Europe.

In interviews, the three said they had taken the unusual step of lobbying directly in Europe to counter the activities of American technology businesses and the U.S. Commerce Department, which has led an effort to weaken or remove provisions of the European legislation that would let people block or limit standard Web tracking.

"We are here to correct the record," Mr. Wizner said. "Certainly the U.S. government has been making misleading statements about the state of electronic privacy law in the U.S., how consumer protections are as strong in the U.S. as in Europe. But that is simply not the case."

Mr. Wizner said the United States had no equivalent to Europe's general data protection law. U.S. law, he said, guarantees consumer privacy only in specific cases, like medical and financial records, but permits online companies to conduct unfettered data mining with only take-it-or-leave-it privacy controls.

Under the proposals, Web businesses would be unable to perform basic collecting and profiling of individual computer users unless they gave their explicit consent as part of policies that allow them to specify what kinds of information could be collected and for what purpose. Businesses would also have to permanently remove and delete personal information from users upon request, and national regulators would gain the ability to fine companies up to 2 percent of their annual sales for not complying.

The proposals are before the European Parliament and a council of 27 E.U. justice ministers, which are attempting to put together consensus positions. Parliament is expected to complete its draft by late April and would then enter negotiations with the justice ministers over the remainder of the year, with adoption expected in early 2014.

The outcome of the debate is critical to U.S. technology companies, which typically generate a third or more of their sales in the 27-nation European Union, often commanding greater, and more lucrative, market shares than in the United States.

During a speech in Brussels on Dec. 4 at a conference on privacy, the U.S. ambassador to the Union, William E. Kennard, urged lawmakers to amend parts of the legislation that would require businesses to obtain explicit consent from consumers before collecting and mining data and to remove all traces of personal data from the Internet upon request.

"Differences between the E.U. data protection legislation and the U.S. privacy protection regime should not be allowed to hurt E.U.-U.S. trade and should not prevent businesses from developing their activities on both sides of the Atlantic," Mr. Kennard said, according to a copy of his speech.

Lobbying has also been conducted from the U.S. mission in Brussels by Cameron Kerry, the Commerce Department's general counsel and younger brother of Senator John Kerry, the Massachusetts Democrat in line to become the U.S. secretary of state. Joe McNamee, the executive director of European Digital Rights, a Brussels nonprofit umbrella group of online privacy advocates, was invited and met with Mr. Kerry last year at the mission. Mr. Kerry has also met with digital rights groups in the Netherlands and Sweden. Mr. McNamee, a native of Ireland who has been working in lobbying and advocacy in Brussels for 15 years, said the level of direct lobbying by U.S. companies and the U.S. government on the European data proposals was unprecedented.

"From my experience, the U.S. companies are more prominent than I've seen before," Mr. McNamee said. "And it is also the most active campaign I've seen where the U.S. government has been so visible."

Some of the lobbying efforts have already borne fruit. In December 2011, days before Ms. Reding was to close the public comment period on her initial proposal to revise the data protection laws, the U.S. mission sent a letter to all 27 European commissioners voicing its objections to several core parts of the proposal that would restrict trade.

Mr. McNamee said the last-minute timing required Ms. Reding to remove a key provision that would have prohibited E.U.-based companies from sharing personal data of their customers with foreign authorities. The prohibition would have created a conflict with U.S. law, which gives the U.S. government the right to have access to information of all companies registered in the United States.

Several commissioners supported the objections, and because the commission only puts forward recommendations by unanimous vote, Ms. Reding removed the controversial provision from her proposal. Since then, U.S. businesses, along with associations where they are members, have been actively following the legislative meetings on the issue.

According to a list of documents submitted to lawmakers that was compiled by a Swedish lawmaker, Amelie Andersdotter, a member of the Pirate Party, U.S. companies including eBay and Amazon have proposed amendments intended to weaken restrictions on collecting data.

Also, industry groups like Digital Europe, a Brussels association whose members include Microsoft, Cisco, Intel, I.B.M., Oracle, the Google subsidiary Motorola Mobility, Texas Instruments and Dell, along with European and global tech companies, have also sought to change the legislation. Trade groups representing banks and insurance companies, whose data processing would be affected, have also been active.

The onslaught of industry scrutiny has already resulted in a formidable number of amendments that European lawmakers will have to navigate to reach consensus this spring before entering final-round negotiations with E.U. justice ministers. Five committees of the European Parliament are making recommendations on the proposals. In just one, the Industry, Research and Energy Committee, lawmakers have proposed 917 amendments so far.

Given the magnitude of U.S. industry opposition, supporters of the European proposals are worried about the prospects of producing meaningful changes.

"The outcome is very unclear at this point," said Jérémie Zimmermann, a spokesman for a French digital rights group, La Quadrature du Net. "The U.S. lobbying on this has been very effective so far. It is impossible to tell what will happen."

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This article originally appeared in The New York Times.


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