The role of multilateralism in shaping the future of data sharing

Our societies generate data on an unimaginable scale – estimated at a mind-blowing 175 zettabytes in 2025 (there are 21 zeroes in a zetta). A modern car alone generates 25 GB of data per hour. This data is the source of future wealth. It feeds artificial intelligence algorithms and future innovations. It will transform the way we produce, consume, and live. Data is also extremely coveted. In a global digital landscape that is rapidly changing, extremely competitive, and threatened by fragmentation, how can data continue to circulate and be shared, but also be secured and regulated?

Author: Sciences Po student Irina Anghel summarizes the debate session of the third edition of the Paris Peace Forum

Debate title: Toward a new governance framework for the data economy

Date: 13 November 2020

When it comes to international data flows, governments are walking a tightrope. Letting data move freely across borders benefits global supply chains, reduces trade frictions, and boosts innovation. But the promise of the free data economy also comes with a factory flaw: too much of it threatens national security and individual privacy. Speaking at the 2020 Paris Peace Forum, government and business leaders discussed the European Union’s role in setting privacy standards, the need for clear rules for data-sharing, and a multilateral approach to set them.

Leading the pack of privacy champions is the EU. Its sweeping General Data Protection Regulation (GDPR), which gives individuals extensive control over their data and limits data-gathering purposes, has become a standard for the bloc’s trade partners. To exchange data with the EU, over 120 countries adopted Europe’s strict data protection rules.

Effective data regulation is “not only possible but necessary”, said Thierry Breton, European Commissioner for Internal Market.

The EU’s privacy policies are also changing how businesses manage data outside Europe. “GDPR sets the gold standard for the world”, stated Filip Van Elsen, Chair of the global Telecommunications, Media and Technology sector group at Allen & Overy.

“Mastercard subscribed to GDPR not only for European business but also for other business around the world,” said Ajay Banga, President and CEO of Mastercard and Chair of the International Chamber of Commerce, during the debate. “We feel these rules are essential for consumers.”

But even the gold standard could be improved. Nicolas Théry, Chairman at Groupe Crédit Mutuel, stressed that not all data are created equal, and there should be special safeguards for particularly sensitive data such as financial and health data.

He also raised concerns about security issues. As consumers are not always aware their data flows between spaces with different protection policies, he highlighted the importance of locating data infrastructure in countries with similar regulations.

Breton spoke of the EU’s new Data Act, set to be launched in 2021. The Commission unveiled two legislative initiatives as part of the European Digital Strategy, the Digital Services Act, which enables data sharing across sectors and member states and requires platforms to regulate data flows, and the Digital Market Act, set to prevent the emergence of monopolies.

While supporting the EU’s ambitions to create a competitive European cloud and a secure health data space, Van Elsen warned of erecting new borders for data before improving those already in place.

Previously, the EU promoted innovation through a block exemption on intellectual property rights, protecting competition. “I think you could do the same for data”, Van Elsen said. “Why not issue a block exemption for data-sharing?”

He called for clearer, more predictable rules for businesses transferring data outside the EU, which is becoming more complex after Brexit, and for the creation of a trans-Atlantic level playing field. Data-sharing “has become a very legalistic issue, complex for companies”, he said. “Have we put the hurdle too high?”

This question highlights the thin line between innovation and regulation. It also resonates with critics from the United States, who say the EU is using the privacy argument to break up Big Tech.

Théry answered that it wasn’t “a question of a purely competitive market. It’s a question about the kind of society that we want. Data is not a person, it’s a feature of our identity”. He expressed support for the EU’s privacy policies, arguing that “if we establish data as a purely economic good, I think that our freedoms will suffer.”

While most of the debate was centered around individual data, more regulation is needed to tackle “the new wave coming in”, Breton said. He warned that industrial or B2B data will increase dramatically in the coming years and pose an even greater challenge, as 5G technology will lead to smart cities and smart hospitals. “We need specific infrastructure for this”, he said and highlighted the EU’s initiative to create a European cloud.

The balancing act of letting data float freely is, by definition, performed on the world stage. But there is no world authority for the data economy. This needs to change, according to Banga.

The Financial Stability Board (FSB) was created by the G20 after the 2008 financial crisis to enable finance ministers and regulators to coordinate recovery efforts and discuss future policy. “I think we need something like that today for data and technology”, said Banga. “An FSB for tech creates the right forum for this conversation.”

This would require countries like India and China, which have taken a more protectionist approach towards cross-border data flows, to get on board.

“Chinese people are willing to give up their privacy for the common good”, stated Lu Miao, Co-founder and Executive Secretary General of the Center for China and Globalization. “I hope that in normal situations privacy will be respected.”

China remains the only country that bans nearly all international data flows while having weak safeguards for individual privacy within its borders. In 2019, India – which forbids payment information from leaving its territory – and other developing nations refused to sign a Japan-led initiative in the G20 to set global standards for free cross-border data flows.

Still, Miao concluded, “We should avoid using data as a weapon against each other and hold up multilateralism.”

By Irina Anghel

Watch the full debate

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