Staying the course on data flows: a priority for the G20

How to create confidence in the digital world? We at Microsoft have joined the G20’s business dialogue process (B20) and will discuss concerns and responses to this question at the G20 Conference on “Digitalization: Policies for a Digital Future” taking place in Düsseldorf today, before the meeting of the G20 digital ministers.

Digitalization and its impacts are high on the G20’s list of priorities for 2017. Digital transformation has become a way to drive “strong, balanced, sustainable and inclusive economic growth” and an overarching prism to view how we regulate a series of interconnected policy issues. Because of the impacts on our local economies, we need international dialogue and joined-up thinking about how to advance digital developments both wisely and responsibly.

The B20 taskforce on digitalization has identified three areas for collective action: encouraging the uptake of industrial Internet applications, supporting the evolution of Artificial Intelligence (AI), and fostering global connectivity. Although the EU’s Digital Single Market Strategy can help address many issues, concerns remain that uneven application of new rules could further fragment, rather than unite, the single market.

Data localization measures are a prime example, designed to keep data within national borders. Such policies are sometimes called for in an attempt to protect national economic interests but frequently have the opposite effect. Such requirements are particularly burdensome for SMEs, who suddenly need to know all the ins-and-outs of the varying legislation applicable in every Member State they operate in. This is manageable for a large multinational company with hundreds of in-house lawyers; less so for a startup or a family-run business. Bearing in mind that SMEs represent 99% of all businesses in the EU, the potential impact on Europe’s overall competitiveness is considerable.

But questions related to the free flow of data go beyond Europe’s borders. A recent McKinsey report notes that while trade in goods and services has declined since 2012, digital flows of commerce and information have soared. In a decade, cross-border bandwidth has grown 45 times larger and global data flows have raised the world’s GDP by an estimated 10 percent. As my colleague from Microsoft Germany, Sabine Bendiek, put it recently: “the new global trade economy is no longer measured in standard shipping units, but in bits and bytes.”

Information continuously crisscrossing the globe is not just good news for the technology industry. The OECD has pointed out how cross-border data flows enable companies from all industries, and of all shapes and sizes, to participate in the global economy. SMEs in particular benefit from access to new markets and trading opportunities; over half of the companies that had registered under the Privacy Shield’s predecessor, the Safe Harbor agreement, had fewer than 100 employees.

The free flow of data underpins the competitiveness of local economies and the functioning of global marketplaces. But appropriate privacy and security safeguards should underpin the data flows themselves. As MEPs Viviane Reding and Jan Philipp Albrecht highlighted just last week, “data privacy and data flows are not mutually exclusive. They can reinforce each other.” The EU’s efforts in this regard have already led to data transfer agreements with 12 countries, as well as the launch of negotiations with Japan and South Korea – giving Europe a strong economic footing on the world stage.

The ongoing commitment to finding common ground across borders is a principle which should underpin all our dealings in the digital era. This means improving the harmonization of legal frameworks and standards, pursuing international dialogue based on shared values (which may themselves need to be updated – something I talked about in Berlin yesterday), and making existing rules such as Mutual Legal Assistance Treaties (MLATs) fit for the digital age.

So when it comes to moving forward with confidence, we need to create a future that builds trust, and to build enduring trust, we must find ways to advance inclusive and responsible digitalization.

Tags: ,

John Frank
Vice President for EU Government Affairs

John Frank is Vice President EU Government Affairs and is leading the Microsoft Brussels office. Prior to this role Frank was Vice President and Deputy General Counsel, leading the Digital Trust and Security group which includes the Law Enforcement and National Security team, the Digital Crimes Unit, the Industry Affairs group, and Competition Law, Privacy and Government Contract Compliance teams. Frank joined Microsoft in Paris in August 1994. His responsibilities focused on competition law matters with the European Commission and national governments, software licensing and copyright law and regulatory policy for the Internet. Prior to joining Microsoft, Frank practiced law in San Francisco with Skadden, Arps, Slate, Meagher & Flom. Mr. Frank received his A.B. degree from the Woodrow Wilson School of Public and International Affairs at Princeton University and his J.D. from Columbia Law School.