There’ll be a price to pay for privacy

You may have noticed something odd about your email inbox this morning. No one is getting in touch with an unbeatable offer on garden equipment, there are no special two-for-one deals at the local pizza restaurant, that Nigerian gentlemen seems to have decided not to offer you a chance to take part in his latest business venture, and even the proposals of marriage from Ukrainian ladies seem to have dried up. The spam is gone.

If, like just about everyone else in the world, you have politely declined to resubscribe to that website you last visited a decade ago you will be blissfully free of junk emails. With the new GDPR legislation now in force across Europe, companies must stop sending them. On one level, of course, that is a relief.

There is a problem, however, and it is far from a minor one. Data privacy will come at a cost, even if it is mostly hidden for now. The compliance bills will be massive, small companies will be hit hardest, and new technologies will be restricted.

In its early days, the internet had very little regulation. Lots of companies were roguish about collecting data and showed shockingly little respect for how it might be used. There is no harm in clamping down on that and forcing marketing departments to be more responsible.

The trouble is, like most regulations, the benefits are easy to see, while the costs only become apparent later. But that doesn’t mean GDPR won’t have consequences. In fact, it is going to hurt the European economy in four ways.

First, all that compliance costs money. No one really knows how much is being spent making sure the new rules are adhered to. One American estimate put the tab at $7.8bn (£5.9bn) for the Fortune 500 companies alone. For a global figure, you’d probably have to at least double that. Wages will be lower, dividends will be reduced, prices will be raised, and factories won’t get built as money is diverted to data compliance instead.

Second, just like any regulation, it is the small companies that will be hardest hit. Giant corporations can take the hit and bring in the IT consultants to make sure all the right regulatory boxes are ticked. Their smaller, nimbler, but less generously financed rivals won’t find it so easy. One of the best things about the internet is the way it levels up the playing field between small and big organisations. This will tilt the playing field again – and not in the right direction (which, incidentally, might explain why so many big business lobbyists are in favour of it).

Third, it will hit new technologies. Driverless cars and AI machines will collect massive amounts of data and share it online as they learn how to operate – one reason why machinedriven cars will be better drivers than you and me ever will be is they will have so much data to draw on. We don’t know how technology will develop over the next decade: by definition we don’t know anything about stuff that hasn’t been invented yet. But we do know it will involve data, and the more restrictions we put on the way that is collected and used, the less likely it is to be developed in Europe.

Finally, this is only the tip of the iceberg. There is lot more restrictive legislation to come. The EU is staging a massive power-grab to become the world’s de facto data and internet regulator. Once data protection bureaucracies are established, their power and influence will grow and grow, especially as they will be subject to so little democratic control. The clampdown on spam might be manageable – but the next set of rules less so.

Sure, it was annoying but there is very little evidence all that spam was a real problem (here’s a tip – use a different email address for shopping and the problem disappears). Europe was already a relative backwater in developing new tech companies. The UK has a few promising businesses, and so does Sweden, but major economies such as Germany and France, with a long record of technical brilliance, have hardly any. This legislation will take that problem and make it worse. That is a high price to pay for clearing out some of the rubbish cluttering up your inbox.

‘It is the tip of the iceberg. There is more restrictive legislation to come’