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GDPR and the European Market: What Startups Need to Know

The benefits of selling in the European Union are numerous. All 28 member states abide by the same set of import rules, which streamlines the regulation process. The shared market also facilitates international trade within members. 

Further, the European Union’s 500-million strong population makes up the most formidable economy in the world, worth more than $16 trillion Euro. As an added benefit, many European countries are extremely business-friendly and offer intriguing incentives for foreign companies looking to sell or produce goods within their borders. 

Since 2016, non-EU companies have had to comply with General Data Protection Regulation (GDPR) to access European customers. These regulations provide enhanced protection for customer data and personally identifiable information by holding companies liable for data misuse and leaks.

While GDPR has made navigating the European business landscape more complex, it is far from impossible. 

What is GDPR?

As a whole, the EU has prioritized citizen privacy and data. However, as technological innovations transformed the ability to collect and analyze personal data, the European Commission, the governing body of the EU, needed regulations that reflect the privacy challenges brought on by the modern world.

The European Parliament approved the GDPR as a necessary update to the 1995 European Data Protection Directive. GDPR came into force in 2018. Today, all companies handling the personal data of European Union residents must comply with these regulations.

Personal data is defined as any information that can be used to identify an individual. This includes contact information, such as phone numbers and address, as well as other markers of identity, such as location data, photographs, or government identification numbers. GDPR also protects biological and physiological data, including health records and genetic data. 

GDPR is based on seven basic principles, many of which are included in the European Convention on Human Rights, the cornerstone of the European Union. Under GDPR, all data subjects, the term for a private individual, have the right to know when their data is being collected and how it will be used. All EU residents also have the right to request access to their data and for their data to be removed. 

Companies must also demonstrate transparency by only using data for the stated purpose, limit the amount of data collected, and properly dispose of data once it is no longer needed.

GDPR also requires all businesses that handle personal data, no matter the size, to delegate at least one data controller. This role is responsible for collecting data and ensuring confidentiality, security, and transparency. 

Large web-based corporations that process immeasurable volumes of customer data, such as servers and Software-as-a-Service providers also hold responsibility as data processors. 

Why Comply?

GDPR compliance is heavily enforced, and transgressions can result in hefty fines. The law is regulated by each member state, but particularly egregious violations can trigger lawsuits. For example, Google and Facebook were two of the first companies sued under GDPR for more than $8 billion.

Beyond the heavy-handed punishments for non-compliance, following GDPR guidelines also builds trust with European customers. Many Europeans are guarded about sharing their data, especially with businesses. 

Similarly, Europeans have much more skeptical attitudes towards the data harvesting potential of tech giants such as Facebook and Google than Americans. For this reason, they are much less willing to accept privacy breaches in exchange for convenience. 

Companies from nations with more lax regulations, such as the United States, must demonstrate clearly to European customers that they will take their privacy rights seriously.

Data Vulnerabilities

Under the GDPR, companies are responsible for securing customer and vendor data, whether it’s written down or saved in the cloud. If a breach does occur, companies are obligated to notify affected customers, or face steep fines.

Many foreign companies mistake GDPR compliance as an IT issue. However, since GDPR stipulates that data may only be collected if the customer gives informed consent, marketers, sales teams, and copywriters must also be well versed in GDPR compliance. 

Getting GDPR Right

To help companies adhere to GDPR criteria, the European  Commission publishes a comprehensive security checklist.  All companies should conduct regular security audits to identify any flaws in their data collection, processing, storage, or removal systems. 

Companies that rely on cloud based storage systems should invest in software and tools for cloud security that can perform real time detection of unauthorized access. Any employee that interacts with personally-identifiable data should receive rigorous training in GDPR compliance, data security, and awareness.

Companies should also develop procedures for notifying customers of breaches and ensuring that GDPR is followed at all times. 

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