While there has been a growing concern over consumer privacy, there are some regulations that are a bit over the top. According to Bernd Leukert of SAP, German software company, the new EU privacy laws will only stifle economic growth because the smallest infraction could cost startups big. He feels that they have gone more than a bit overboard on trying to protect the privacy of consumers and although businesses agree that more should be done to protect private data, the solutions the EU are mandating will most likely put a huge number of startups out of business before they even get a solid foothold in the markets.
New Regulations May Be Hard to Comply With
As reported in the Financial Times, Leukert stated that just one single infraction could financially wipe out a startup and he further went on to elucidate that a total of 25 such violations could wipe out the entire revenue of a startup in one fell swoop. He, and other enterprise software experts, feel that the regulations being imposed are probably going to be difficult to comply with.
Advice from SAP – German ERP Software Giant
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Consumers May Become Frustrated with Extra Steps
The problem, as Leukert sees it, is the fact that consumers now need to go through extra steps to provide information to companies they are dealing with. A simple ‘I agree’ tick box is no longer sufficient and so many consumers may become frustrated with all the extra steps they need to take to agree to that company collecting key information.
Huge Fines Being Imposed
What Bernd Leukert finds especially harsh are the fines imposed for the violation of these new data protection rules. For example, a company may be fined as much as 4pc of ‘global revenues’ which, of course, would be altogether too steep for a small startup to bear. He believes that these new and steep sanctions will stifle growth throughout Europe where the governing authority of the EU extends.
Laws Need to Be More Consistent Globally
Leukert summed it up by saying that laws needed to be more consistent with local rules and regulations and what was called for was a global initiative that would make regulations more consistent around the world. With local ordinances, national ordinances, EU laws and rules from other parts of the world, there is no uniformity and that isn’t healthy for small businesses and startups that don’t have large legal teams to advise them.
The new regulations go into effect as of 25 May, 2018 so it is a waiting game until then. He advises startups to begin working on ways to comply with these new, tough regulations so that when the laws go into effect, they aren’t caught unawares.