In this segment from Motley Fool Money, host Chris Hill and analysts David Kretzmann, Jason Moser, and Aaron Bush talk about the GDPR, which has recently had companies big and small scurrying to get you to renew your consent for how they use your data, and moving even faster to implement systems that won't earn them big fines for misusing it.
What is the General Data Protection Regulation, and what new rights does it give you? And how will it impact the businesses that operate using that data? The Fools explain.
A full transcript follows the video.
This video was recorded on May 25, 2018.
Aaron Bush: I think so. What this is, it's a new law that lets E.U. citizens gain more control of their data, and it forces companies who operate and serve those E.U. citizens to be more responsible with that data. That's the biggest picture of what that means. So, all of these companies that have worked with E.U. citizens, whether they're European companies or North American, U.S.-based companies, they've had to work incredibly hard to improve their data processes, update them, and invest in the teams to make that happen. I do think it's ultimately a good thing for individuals.
A couple things that it gives new rights to users for: it gives rights to access what data companies have on you. You can see what all these companies have tracked for you. You can ask to rectify data or delete data or withdraw consent from different things. It's one step closer toward individuals truly owning their data. It's not all the way there yet, but starting in the E.U., it's a big step.
David Kretzmann: I don't know if Aaron mentioned this, but the fine for companies that don't comply with these new regulations would be up to 4% of your annual global revenue. Not profit, but revenue. This clearly going after the tech incumbents who have been skirting over ways to pay taxes in Europe. At the same time, that means a lot of smaller companies, it's going to be even more challenging and expensive to comply with regulations in the E.U. Just speaking for our teams here at The Motley Fool, we're a company with several hundred employees, but we've had a pretty big team spending months working on getting compliant with these new rules. And you even have some companies that basically suspended their websites in Europe until they can figure this out, and whether it's viable for them to be there -- including Tronc, the publisher of the LA Times and New York Daily News. Tronc, at this point, you cannot access it in Europe. This is obviously going after the tech incumbents. But at the same time, they're the companies that have the resources and the time to make sure they are compliant.
Hill: Yeah. So, in terms of Facebook and Alphabet and the advertising business, as David said, they have the resources to deal with it. I'm not necessarily worried about their ability to make more money. But I'm wondering if, long-term, the ripple effect here is that, if there's a lowered ability to target ads, then those ads, in theory, becomes less effective, marketing becomes more of a challenge, and maybe the ROI isn't as great.
Bush: I think that's probably directionally accurate. I also think there could be regional differences in how you target people in different regions. If I'm starting a newspaper in the U.S., for example, I don't know if I would want to open access to E.U. citizens, because it could completely change the way I have to build my team, work with the data. I don't know enough about it to say that that's true, but I know a lot of companies right now are going through issues like that. So, it definitely is like, how well can you target, but it's also, how well can you keep on doing what you're doing.