Why enabling global data flows should become an EU policy priority (again)
An entrepreneur is never more than a good idea and a dataset away from the next unicorn. Sounds like a broken record? But what if that dataset is from another country or if your startup is using platforms from around the world. All actors in the EU policy space should be aware that startups are interconnected within global ecosystems that are underpinned by international data flows.
Over 3000 companies, including startups and scale-ups, relied on the Privacy Shield framework prior to its invalidation by the CLEU in 2020. These companies were serving countless more businesses and consumers, enabling EU startups to compete with both big digital and analog players. A walk into any startup incubator will prove the point. Startups use mass-mailing platforms, analytics services, marketing tools, online name generators, 24/7 support service for EU customers and more. Here’s a list of 300+ free platforms an entrepreneur can use when building a startup. Using these resources has allowed EU entrepreneurs to focus on what they’re good at: building more E-Unicorns and creating jobs.
Crucially, entrepreneurs use these services because they offer the best product at any given moment, not because the player that offers them is large or small or because they are based in the US, EU or elsewhere. For a startup, the ability to make these choices can make the difference between success and failure.
Policy makers should make every effort to allow entrepreneurs to keep tapping into this wealth of resources by enabling globally interconnected digital markets. Concretely, this means continuing the moratorium on customs duties for electronic transmission, but also building clear and legally robust legal frameworks to transfer data. Entrepreneurs should not be having to hire more lawyers than developers when they decide to go international or when they simply decide to hire a service to effectively support their daily operations. Artificially dividing global digital markets, be it through de jure or de facto data localisation requirements, is the measure that will do the most harm to startups.
Privacy legislation is proliferating across markets – a fact startups understood years ago. At the same time it is also apparent that not every jurisdiction has the same level of privacy legislation. In this time of rapid change, it remains critical that legally robust mechanisms which allow startups to continue serving businesses and consumers across borders are preserved. The alternatives: complex data transfer mechanisms that potentially require localisation, scenarios that neglect the risk-based approach alluded to in the GDPR, or fragmentation and additional hurdles added by individual countries, will only favour large digital and analog incumbents.
In the coming months, Allied for Startups will use its newly launched Global Data Flows and Privacy workstream to, amongst other issues, explore what data flows options exist, and how we can provide legal certainty in global data flows in order to empower entrepreneurs. Global data flows are part of the reason why startup ecosystems have become an EU success story. We want to help write the next chapter in this story. Let’s restart a long overdue conversation.