Florida Law Review Volume 71 Issue 2 Article 3 Towards a Global Data Privacy Standard Michael L. Rustad Thomas H. Koenig Follow this and additional works at: https://scholarship.law.ufl.edu/flr Part of the Privacy Law Commons Recommended Citation Michael L. Rustad and Thomas H. Koenig, Towards a Global Data Privacy Standard, 71 Fla. L. Rev. 365 (). Available at: https://scholarship.law.ufl.edu/flr/vol71/iss2/3 This Article is brought to you for free and open access by UF Law Scholarship Repository. It has been accepted for inclusion in Florida Law Review by an authorized editor of UF Law Scholarship Repository. For more information, please contact [email protected]. Rustad and Koenig: Towards a Global Data Privacy Standard TOWARDS A GLOBAL DATA PRIVACY STANDARD1 Michael L. Rustad* & Thomas H. Koenig** Abstract This Article questions the widespread contention that recent updates to European Union (EU) data protection law will drive a disruptive wedge between EU and United States (U.S.) data privacy regimes. Europe’s General Data Protection Regulation (GDPR), which took effect in May 2018, gives all EU citizens easier access to their data, a right to portability, a right to be forgotten, and a right to learn when their data has been hacked. These mandatory privacy protections apply to non-EU companies that offer goods or services to EU consumers, whether through a subsidiary or a website. The “Brussels Effect” hypothesis projects a “race to the top” as multinational entities find it easier to adopt the most stringent data protection standards worldwide, rather than satisfying divergent data privacy rules. The GDPR is said to be a prime example of the Brussels Effect because of its aggressive extraterritorial scope that unilaterally imposes EU law on U.S. entities. This Article acknowledges a Brussels Effect, but there is also an overlooked “D.C. Effect” reflected in the GDPR’s adoption of many U.S. data privacy innovations. The GDPR imports long-established U.S. tort concepts for the first time into European privacy law, including deterrence-based fines, collective redress, wealth-based punishment, and arming data subjects with the right to initiate public enforcement. Under the GDPR, the EU Commission adopted “Privacy by Design” and security breach notification obligations, innovations pioneered in the U.S. The net effect of the GDPR is a bilateral transatlantic privacy convergence, which is rapidly evolving into a global data privacy 1. The authors would like to acknowledge the support, encouragement, and ideas of Professor Sara Dillon, who teaches European Union Law at Suffolk University and is Director of Suffolk University Law School’s program at the National University of Ireland-Galway. The research and editorial contributions of Suffolk University Law School research assistants Gherardo Astaldi, Sarah E. Halstorm, Leonard Phillips, Gerardo Santali, Elizabeth Saylor, and Oliver Stark were very valuable. Elif Kavusturan, a Suffolk Law School SJD student, and Noe Leiva, Esquire provided insightful suggestions. Thanks also to Seth Markley, Michael Rustad’s administrative assistant, for his technical and other assistance on this document. * Michael L. Rustad, the Thomas F. Lambert Jr. Professor of Law, is the Co-Director of Suffolk University Law School’s nationally ranked Intellectual Property Concentration. Professor Rustad is a member of the American Law Institute and served on the ABA Business Law Section’s Subcommittee on Information Licensing. In 2017 and 2018, Professor Rustad taught law school courses on U.S. v. EU privacy law in Suffolk’s summer program at the National University of Ireland-Galway. ** Thomas H. Koenig is a professor and former chair of the Sociology and Anthropology Department at Northeastern University in Boston. Professor Koenig is a founding member of both Northeastern University’s Law and Public Policy and its Cybersecurity Ph.D. programs. 365 Published by UF Law Scholarship Repository, 1 Florida Law Review, Vol. 71, Iss. 2 [], Art. 3 366 FLORIDA LAW REVIEW [Vol. 71 standard. Nations around the world, some U.S. states, and the major U.S.- based data processors are instituting policies harmonized with the GDPR. This Article argues that the GDPR has the potential to not only bring an end to the transatlantic data privacy wars, but to become the basis of a worldwide “gold standard” for global data privacy. INTRODUCTION .....................................................................................367 I. EU and U.S. Data Protection Compared ................................371 A. The Fundamentals of EU Data Privacy Law .................372 1. EU Privacy as a Fundamental Right .......................372 2. Charter of Fundamental Rights of the European Union ......................................................373 3. Data Protection Directive of 1995...........................373 4. The General Data Protection Regulation ................375 B. An Overview of U.S. Privacy Law..................................381 1. Sector-Specific Statutes ..........................................381 2. The FTC’s Role as a National Data Privacy Constable.................................................................381 3. FTC Enforcement Actions ......................................383 4. Privacy-Based Torts ................................................384 5. The ALI’s Data Privacy Principles Embody EU Privacy Norms ..................................................385 II. EVIDENCE OF A BRUSSELS EFFECT ON U.S. DATA PRIVACY LAW .........................................................................387 A. U.S. Companies Are Complying with the GDPR ...........389 B. U.S. Compliance with EU Data Transfer Rules.............396 1. Safe Harbor 1.0 .......................................................398 2. The ECJ’s Reversal of Safe Harbor 1.0 ..................400 3. Privacy Shield .........................................................402 4. Brussels Effect in the United States ........................403 C. Against the Brussels Effect: Areas of Divergence..........405 1. The Right to Be Forgotten & U.S. Privacy Law .....405 2. The Right to Rectification.......................................409 3. EU Consumers Have Rights Just Beginning to Evolve in the United States.................................410 III. THE “D.C. EFFECT” ON EUROPEAN DATA PROTECTION ..........411 A. How the United States Shapes EU Data Privacy Law ...411 1. Consent as a Common Cornerstone ........................412 2. Data Minimization ..................................................413 3. Privacy by Design ...................................................417 B. “U.S.- Style” Remedies Imported into the GDPR..........419 https://scholarship.law.ufl.edu/flr/vol71/iss2/3 2 Rustad and Koenig: Towards a Global Data Privacy Standard 2019] TOWARDS A GLOBAL DATA PRIVACY STANDARD 367 1. The GDPR Imports “U.S.-Style” Enforcement.......420 2. Data Security Breach Notification ..........................422 3. The U.S. Pioneered Laws Protecting Children’s Privacy...................................................424 4. Collective Redress Under the GDPR ......................425 5. Privacy Enforcement & Wealth-Based Punishment..............................................................429 IV. TOWARDS A GLOBAL DATA PRIVACY STANDARD...................431 A. The GDPR as a Global Privacy Standard......................431 1. African Data Privacy Law is Generally Undeveloped ...........................................................432 2. Most Asian Countries Align With the GDPR.........434 3. Central America’s Data Protection Developments..........................................................440 4. Eastern and Central America ..................................441 5. The GDPR is in Effect in Europe............................441 6. Data Protection Development in the Middle East .............................................................442 7. GDPR Compliance in North America.....................443 8. Oceania Data Protection Developments..................444 9. Data Protection Reform in South America .............445 10. Data Privacy in the Caribbean.................................448 B. Evidence for an Emerging Global Data Privacy Standard............................................................449 CONCLUSION .......................................................................................452 INTRODUCTION Dublin’s Silicon Docks is the center of operations for the European divisions of Twitter, Facebook, LinkedIn, and other top-ranked information technology companies.2 These subsidiaries of United States (U.S.) multinational companies must either comply with European Union (EU) privacy law or withdraw from the largest economy in the world.3 2. Other examples of U.S.-based high technology companies with subsidiaries headquartered in Ireland include Google Dublin, Apple Operations Dublin, Cisco Galway, Dropbox, and Dell/EMC. 3. The European Commission Directorate-General for Trade stated: Although growth is projected to be slow, the EU remains the largest economy in the world with a GDP per head of €25 000 for its 500 million consumers. The EU is the world's largest trading block. The EU is the world’s largest trader of manufactured goods and services. The EU ranks first in both inbound and outbound international investments. The EU is the top trading partner for 80 Published by UF Law Scholarship Repository, 3 Florida Law Review, Vol. 71, Iss. 2 [], Art. 3 368 FLORIDA LAW REVIEW [Vol. 71 Michael Rustad taught a course titled