Europe takes lead in data privacy: An opportunity for born-global startups

By Amiel Kornel, www.venturecraftstudio.com

Conducting business on a global scale is rife with opportunity, and also plagued with potential pitfalls. What’s accepted or condoned stateside is often a different story once you cross the border. Take data security and privacy: The European Union is about to become for data privacy what California is for environmental protection — a bellwether and trend-setter of progressive policies that could give its industry an edge in the global Internet marketplace.

The EU’s General Data Privacy Regulations (GDPR) go into effect later this month on May 28 and stand to become a huge headache for Facebook and other Web behemoths, mostly US-based. Here’s the challenge: These firms will be forced to adapt the myriad ways in which they capture and apply consumer data to deliver ads, shape online experiences, and limit consumers’ ability to switch service providers. Smaller US businesses looking to go global will also be required to adhere to these stringent data security and privacy regulations. It represents a teachable moment for entrepreneurs looking to cast a global net.

Of course, where there are hurdles, opportunity also awaits. Stronger and more uniform privacy laws across Europe will put an end to formerly fragmented, piecemeal regulations adopted by individual EU members. These new regulations can be a boon for “born global” startups originating in the EU. The small scale and nimbleness of these insurgent companies make compliance easier and less costly than for large existing firms that will have to revise current practices, protocols and systems developed over years to conform to these new rules.

For US-based startups that are governed by domestic regulations, it might take longer to invest in and get up to speed with GDPR guidelines; this only applies to business practices affecting EU consumers. European startups, however, have no choice but to conform at once: Compliance is de rigeur. Streamlining regulations can only benefit these firms.

Why? First of all, startups with trans-national European ambitions no longer need to deal with a hodgepodge of regulations. Secondly, they can burnish their brand by reassuring consumers that they support the move to give users more control over personal data and the way it is used. Perhaps most importantly, they can get ahead of the entrepreneurial learning curve by innovating ways to apply these new regulations that boost their competitiveness, especially against US ventures.

In short, It behooves owners of data-intensive companies to pay close attention to the changing privacy landscape overseas and trends that affect international commerce. It’s the best way to ensure success here at home, and across the globe.

Amiel Kornel is a venture investor and advisor living and working in both San Francisco and Paris.