BERLIN: Can competitiveness in the digital economy be boosted by loosening data protection standards and allowing companies more license to track user behaviour?
Researchers say that taking away user rights over their data won't support business innovation.
A new policy paper, produced under the leadership of Germany's Fraunhofer Institute for Systems and Innovation Research (ISI) and the University of Kassel, argues that Europe in particular should build its economic future on privacy-friendly technologies, digital sovereignty and trustworthy innovation, rather than blanket deregulation.
The widely held assumption that "less data protection means more innovation" is empirically unsustainable, the authors say.
The paper was written by a team led by Michael Friedewald of Fraunhofer ISI and Alexander Rossnagel, Hesse's data protection commissioner and a professor at the University of Kassel.
The European General Data Protection Regulation (GDPR), a well-known EU privacy and security law that took effect in 2018, is by no means the primary cause of barriers to innovation, they argue. Scientific studies show that the regulation has not led to a general decline in new developments.
Red-tape challenges for small firms
The paper nonetheless identifies tangible challenges. While large digital corporations are generally able to manage regulatory requirements without difficulty, start-ups and small and medium-sized enterprises (SMEs) in particular suffer from bureaucratic burdens and legal uncertainty.
The authors say this imbalance must be corrected through targeted relief measures. They propose that obligations should be strictly aligned with the actual risk posed by data processing, and that manufacturers of standard software should bear greater responsibility.
In the field of artificial intelligence (AI) and data-driven business models, the principle of pure data maximisation does not apply, the paper adds. What matters for business success, the authors argue, is data quality, precision and the exclusivity of training data.
Data protection as a 'Made in Europe' quality mark
The authors warn against setting European fundamental rights and innovation policy against each other. Particularly in sensitive areas such as health care, financial services and public administration, reliable data protection could become a decisive competitive and trust advantage.
To prevent the gap with the United States and China from widening further, the researchers recommend targeted support for data-efficient AI methods, the expansion of regulatory sandboxes for low-risk testing, and greater legal certainty for research.
In this way, compliance with fundamental rights could in future become an internationally recognised quality mark for European digital technology. – dpa
