What is General Data Protection Regulation and Why is it Important?

With the adoption of digital transformation, the threat of cyber-attacks and data theft is also increasing, and companies must proactively protect private data belonging to their customers. The General Data Protection Regulation (GDPR) is even more important. This legislation requires stronger data protection by applying stricter security measures to businesses.

As such, the GDPR ensures that personal data is kept safe from unauthorized access, loss, or theft. Any effective GDPR audit must, therefore, view this critically. The regulation’s benefits, including its strict security requirements, can transform businesses’ drive to protect sensitive information. This article will help guide you through the GDPR’s benefits, purpose, rules and importance for enterprises. 

What is GDPR?

European Union defines GDPR as General Data Protection Regulation, the world’s most stringent privacy and security law, drafted and enacted by the European Union. It applies to organizations around the world if they target or collect data on individuals in the EU. The regulation took effect on May 25, 2018, with stringent fines for violations, running into tens of millions of euros in penalties.

The GDPR reflects the strong commitment to data privacy and security in Europe. The world increasingly stores more personal data on cloud services, and data breaches are becoming commonplace. The regulation is comprehensive and wide-ranging yet lacks specificity, thereby complicating compliance for SMEs.

What are the Purposes and Scope of GDPR?

The General Data Protection Regulation includes the following purposes:

• Protection of Fundamental Rights and Freedoms:

1. One of the major purposes of the GDPR is to protect individuals’ fundamental rights and freedoms, particularly their right to personal data protection.
2. This aim is based on legal acts such as the European Convention on Human Rights, particularly Art. 8, which provides for the right to private life, family life, and correspondence.
3. The EU Treaty on Fundamental Rights emphasizes respect for private and family life and provides protection against personal data under Articles 7 and 8.
4. These legal acts are binding on all member states of the European Union and receive additional support at a national level through national acts, such as the Instrument of Government in Sweden.

• Uniformity and Harmonization of Standards for Protection of Data:

1. The second purpose of the GDPR is to create a uniform and harmonized level of personal data protection throughout the European Union.
2. This has been achieved by making the regulation directly applicable in all member states and ensuring that the same rules are applied coherently throughout the Union.
3. This is aimed at facilitating the free movement of personal data within the European Union without encountering barriers or differences in the protection of data standards.

• Modernization of Rules for the Protection of Data:

1. A third purpose of the GDPR is to modernize and update the rules and regulations contained within the Data Protection Directive of 1995.
2. The aim is to make the regulatory framework adapt to the changing requirements and challenges of digital society.
3. By updating the rules, the GDPR aims to address personal data protection, privacy, and security issues arising in the digital era.

The principle application of GDPR is to all automated personal data processing and manual processing. It applies to processing linked to the EU when an entity processing data is being established within the EU or when outside but monitors behavior within the EU.

In addition, it applies to all operations and activities irrespective of who processes personal data. It applies to companies, associations, authorities, organizations and private individuals.

Brief History of Compliance

“Everyone has the right to respect for his private and family life, his home and his correspondence.” 

Stated by the European Convention of Human Rights under the right to privacy of 1950. Building upon this foundation, the European Union has endeavored to guarantee safeguarding this right through legislative measures. With the evolution of technologies and technological progress, the EU recognized the importance of modern protections. In 1995, the European Data Protection Directive was passed, establishing minimum data privacy and security standards on which each member state developed its own implementing law.

By the mid 1990s, the internet had evolved into a data-driven industry. Significant milestones include the appearance of the first banner ad in 1994, online banking offerings by financial institutions in 2000 and later, in 2006, social media platform Facebook became publicly available. In 2011, a Google user sued the company for scanning personal emails; Europe’s data protection authority announced the EU’s requirement for a comprehensive approach to personal data protection and the 1995 directive was updated. In 2016, GDPR was entered into force after passing the European Parliament, and as of May 25, 2018, it was made compulsory for all organizations to comply with it.

Key Regulatory Points of the GDPR

Data Protection Principles

The GDPR mentions that if any entity or organization poses data, it must adhere to the seven protection and accountability principles outlined in Article 5.1-2:

1. Lawfulness, Fairness, and Transparency: When handling personal data, it must be done in a lawful, fair, and transparent manner.
2. Purpose Limitation: Personal data should only be processed for the specific purposes that were communicated to the individual when collected.
3. Data Minimization: Only collect and process the minimum personal data necessary for the stated purposes.
4. Accuracy: It’s important to keep personal data accurate and up-to-date.
5. Storage Limitation: Personal data should only be stored for as long as it’s needed for the purposes for which it was collected.
6. Integrity and Confidentiality: Personal data must be processed securely to maintain its integrity and confidentiality. This might include using encryption or other security measures.
7. Accountability: The organization or individual responsible for the data (the data controller) must be able to demonstrate compliance with all of these principles as outlined in the GDPR.

Data Protection by Design and by Default

Data protection by design and by default means that every action and process within your organization should inherently prioritize data protection. This principle, outlined in Article 25 of the GDPR, requires that you integrate data protection considerations into the design of any new product or activity.

For instance, let’s say you’re developing a new app for your company. In line with this principle, you must assess the potential personal data that the app might collect from users. Then, one must strategize ways to minimize the data collected and implement the most advanced technology to secure it effectively. Data protection becomes a fundamental part of the design and implementation process rather than an afterthought.

What are the Compliance Obligations of GDPR for Businesses?

The GDPR sets a very tight regime for entities involved in processing personal data and grants enormous rights to individuals whose data is being processed. Natural persons and legal entities, including companies, public authorities, and other bodies, are obliged to follow the provisions of the regulation. This can lead to significant financial penalties, litigation, and reputational damage.

Businesses or entities dealing with personal data, even if outside the EU, need to bring their operations in line with the GDPR requirements when processing data belonging to EU citizens or residents. Moreover, the regulation encompasses those entities that have establishments within the EU and are engaged in personal data processing activities. Hence, a wide variety of persons, companies, public bodies, and other entities are highly impacted by the GDPR and are expected to get familiarized with it in great detail and get informed about how to comply.

Businesses must follow requirements to comply with GDPR, including the following steps:

#1 Perform a privacy audit to determine the legal basis

#2 Obtain legal consent from data subjects

#3 Create and share a compliant privacy policy

#4 Use of data processing agreements to meet the GDPR contractual agreement

#5 Following all GDPR safety and security requirements

New Consumer Rights Under GDPR

1. The Right to Information (Articles 13/14): The GDPR prioritizes transparency in data collection practices, ensuring individuals are fully informed about how their data is collected and used.
2. The Right to Access (Article 15): Individuals can request access to their personal data. Organizations must explain the purpose of data collection and disclose any third parties with whom the data has been shared. This information must be provided promptly, within one month, and without charge.
3. The Right to Rectification (Article 16): Individuals can request corrections if personal data is inaccurate. Organizations must respond promptly and make necessary corrections within one month. They may also need to inform third parties with whom the data was shared.
4. The Right to Erasure (Article 17): Individuals can request the permanent deletion of their data if it’s no longer relevant or if they withdraw consent. Organizations may also need to inform third parties of this request.
5. The Right to Restrict Data Processing (Article 18): Individuals can request limitations on data processing under certain conditions, such as unlawful processing or objection. Third parties may also need to be informed of these restrictions.
6. The Right to Data Portability (Article 20): Individuals can request their data in a clear format and transfer it to another organization without hindrance.
7. The Right to Object (Article 21): Individuals can object to data processing, particularly in situations like d***************.
8. Automated Individual Decision-Making (Article 22): Individuals have the right not to be subject to automated decision-making processes with significant legal effects.

GDPR and the Importance of Protecting Data Privacy

The use of personal information has been transformed since the implementation of GDPR across the European Union. In a data-driven world, every consumer and citizen leaves a data trail in their daily lives. With the digital transformation, personal information is shared every day with organizations, resulting in increased fear of privacy and security.

To address these concerns, the EU introduced GDPR in 2018. The principles behind GDPR put security, confidentiality, and consent at the center of how organizations use data. Integrating the principles with an organization’s data strategy offers benefits, including improved trust with customers and citizens, driving data democratization, reputation protection, and more comprehensive data governance programs.

Rounding Up

GDPR, as a law, is leading the charge in regulating the data flow and the future of privacy for those who prioritize data protection. Consider these alarming data privacy statistics, underscoring the growing demand for transparent privacy practices from businesses:

• 76% of users believe companies should enhance their efforts to safeguard their online data. (Global Consumer State of Mind Report 2021)
• 92% of Americans express concerns about their privacy while using the Internet. (TrustArc)
• Merely 25% of users trust companies to handle their data responsibly. (Pew Research Center)

FAQs

1. What is the GDPR Equivalent in the U.S.?

The United States lacks a federal law directly comparable to the GDPR. However, political leaders are currently discussing the American Data Privacy and Protection Act (ADPPA), which could potentially serve as the nation’s first comprehensive data privacy legislation.

Several state laws, such as the California Consumer Privacy Act (CCPA) and the Virginia Consumer Data Protection Act (CDPA), bear resemblances to aspects of the GDPR. By incorporating and prior

2. Which are the EU countries that have implemented GDPR?

• Austria
• Belgium
• Bulgaria
• Croatia
• Cyprus
• Czech Republic
• Denmark
• Estonia
• Finland
• France
• Germany
• Greece
• Hungary
• Ireland
• Italy
• Latvia
• Lithuania
• Luxembourg
• Malta
• The Netherlands
• Poland
• Portugal
• Romania
• Slovakia
• Slovenia
• Spain
• Sweden
• United Kingdom

3. Can GDPR outside the EU store data?

Data storage outside the EU is forbidden under GDPR. But there are no rules without exceptions, and this too has exceptions, for example, personal data or air passengers shared with the US or Canada.

4. What are some of the emerging GDPR compliance challenges? 

• Impact of generative AI technology on GDPR compliance.
• Tracking PII across multiple environments.

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