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What are Transatlantic Data Flows and How Do They Affect Business?

Transatlantic data flows are complex. This is how we share data between companies or individuals in the EU and their partners in the US. They’re essential for allowing businesses to communicate with each other and share insights, but they also need to protect customer data, which has proved particularly challenging.

Is Data Shared Safely?

The safe and unrestricted flow of data between companies is essential for business. But how that data is shared, stored and used has been a matter of intense debate for a number of years now, particularly between the EU and the US.

Data flows between the EU and the US are governed by the EU-US Privacy Shield. This is a framework that replaced Safe Harbour, which was struck down by the European Court of Justice in 2015 for violating EU privacy law. This is because, according to RSM “Safe Harbour did not ensure that companies undertaking transatlantic data transfers would respect the ‘fundamental rights’ of privacy of EU citizens, prompting officials in Brussels and Washington hurriedly to negotiate an alternative framework.”

How Important are these Data Flows?

As mentioned above, these data flows are extremely important to businesses, so it’s vital that the EU-US Privacy Shield works effectively for all parties.

International digital exchanges are rapidly growing, particularly with global GDP growth slowing and traditional foreign trade and investment flatlining. It is estimated that, between 2005 and 2014, cross-border data flows surged 45 times. All of this means that, in 2014 alone, digital trade contributed $2.4 trillion to global GDP. By 2021, it is predicted that this figure could rise by as much as 9 times the current amount due to digital advancements.

These digital advancements also appear crucial in dictating the future of the global digital economy. So, if your business is part of the global digital economy, then it’s important that you consider dataflows carefully.

These businesses include:

  • E-Commerce businesses
  • Manufacturers of digital technologies
  • Social media companies
  • Telecommunications
  • Media and entertainment companies

It should also be noted that, although people generally think of large multi-national companies such as Facebook or Amazon when they consider data flows, small and medium-sized businesses are also impacted, and functions such as cloud computing can help them expend their current market position outside existing domestic markets.

Data flows are essential for the modern digital economy. However, legislation now dictates what can and cannot be shared across the Atlantic. These data flows are now big business, and if you run a company that partakes in the digital economy, you should read into the legislation carefully.

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