Like the Catholic Church’s Congregation of the Index of 1616, which outlawed the movement of the Earth around the Sun, so too did the European Parliament restrict transborder data flows by legislative fiat this week. Of course, the flow of data across borders will not cease or even diminish. Individuals will continue to carry iPhones on cross-Atlantic flights, “transferring data” (whatever that means) about their employers’ customers to “non-adequate” countries; and European individuals and businesses will access non-EU based websites and services, including banking, telecom, retail and cloud. Lawyers will be paid to produce paperwork, which bureaucrats will read; businesses continue to operate as before. As Galileo said, “And yet it moves”.
To stick with the scientific metaphor, legislation is like evolution; technology – revolution. Legislation is slow, cumbersome, marked by costly errors and recursive amendments. One-step forward two steps back. It reflects a hodgepodge of interests, not always logically consistent or serving the best interests of society or even its sponsors. Consider the backlash against the U.S. safe harbor arrangement. To be sure, the Snowden revelations raised grave concerns about the balance between government power and individual rights, as well as the position of the U.S. in the world. Yet scaling back the safe harbor will not provide EU citizens with even an additional modicum of privacy. Binding corporate rules and standard contractual clauses are no more NSA-proof than existing rules. Instead, it would sever the limb on which FTC jurisdiction hinges, thus blocking action by what some would argue is the most potent enforcer of EU privacy principles in the world.
As aptly demonstrated in the recent showdown between President Obama and Congress, there is nothing new about parliamentary action against self-interest. For another tech-law example, consider the tremendous resources invested by the recording and film industries to block the development of tools such as VHS or Betamax video recording, which allowed time shifting but also illicit copying of protected works. Despite resounding victories in numerous battles in parliaments and courts around the world, the industry lost the war, with digital file sharing capabilities forever reshaping business models and shifting the balance of power from Los Angeles based content providers to Silicon Valley technology firms.
By stark contrast to regulation, technology develops by revolution. The lightning rod of creation, science and innovation takes no prisoners as progress marches on. The imbalance between revolutionary developments and evolutionary responses creates a public policy gap, which helps explain how a legal framework dating back to the 1970s continues to govern data flows today. Those who lived in the 1970s can still remember vinyl records giving in to cassette tapes, compact discs and digital files; Pong played on Atari consoles transforming into Call of Duty on platforms packing the punch of supercomputers; Commodore PCs with 64 kilobytes of RAM becoming today’s Macs with capabilities a million-fold greater. Clearly, regulation conceived in the 1970s strains to keep up with the pace of technology. Yet much like biological evolution, legislative developments are strongly anchored in existing language and norms. Consider the principle of accountability. For many years, policymakers suggested accountability obligations replace the bureaucratic form filling required under existing law. Instead, accountability has emerged in the new European legislation as an additional layer of regulation with the “adequacy” framework for transborder data flows intact.
What all this means is that compliance with the new legislation will remain patchy, resulting in increasingly selective enforcement. Most organizations will continue to fly under the radar and stay off the hook. The “usual suspects”, constantly under the spotlight of the press and regulators, will bear the grunt of the regulatory machine.