Ruth Mitchell

Data Protection law poses threat to UK innovation

The removal of European data protection laws pose a serious threat to innovative businesses, according to the CBI.

The organisation, which represents around a third of the UK’s private sector workforce, made this submission to the Ministry of Justice’s ’ Call for Evidence of the European Commission’s data protection proposals’.

They believe that the regulation is a serious threat to innovative business models which rely on data sharing to generate revenue.

Forcing businesses to comply will also place a cost burden upon them, which may deter others from investing. There is also a danger that the cost burden will be passed on to consumers.

The CBI is now calling on the European Commission to implement a more proportionate, risk based approach to data protection regulation, taking account of benefits versus costs of any changes, and their impact on innovative business models.

Expressing his concerns, Matthew Fell, CBI Director for Competitive Markets said: “Many novel business models rely on data-sharing to generate revenue and offer a more individually-tailored user experience.

“Advertising and subscription-based online music-sharing services are a good example, where we’ve recently seen ground-breaking innovation through partnerships with social networking sites.

“Sharing information about music likes and dislikes online, without sharing the actual content, means millions more customers can now legally enjoy listening to music online – a lifeline for the flagging music industry.”

He also believes that firms from across the commercial spectrum will be adversely affected by the changes, as better quality data can help to drive improvements to business operations and services.

Mr Fell added: “Since innovation is a key driver of economic growth, it’s vital that governments here and in Europe support cutting-edge businesses to continue to innovate, before they get left behind by the rest of the world.”

CBI analysis indicated that the commission has over-estimated the financial benefits of proposed data regulation and underestimated potential compliance costs.

Changes to IT systems, re-training staff and re-issuing customer terms and conditions could cost around £100,000, while the requirement to appoint a Data Protection Officer could cost around £30,000 and £75,000 annually.

Expanding the role of the Information Commissioner’s Officer in the UK to process additional data protection work could place a further cost burden on taxpayers.

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