The shape of future European Union privacy legislation is becoming clearer, as lawmakers closed in on an agreement late Tuesday.
Companies will have to obtain customers' consent before collecting and processing their personal data, and could be fined as much as 4 percent of annual revenue for breaches of the rules. That would put potential penalties for giants like Google and Facebook in the hundreds of millions or billions of euros, compared to the paltry fines of tens or hundreds of thousands of euros that national privacy regulators can impose even for mass data breaches today.
The new laws will also make data controllers -- typically the companies collecting personal information -- and data processors jointly liable in case of misuse. Legislators hope that will cause companies to choose their partners more carefully.
EU laws come in the form of either directives or regulations. Regulations apply directly to EU citizens and companies doing business in the EU, but the effect of directives is indirect: The 28 member states each have two years to transpose them into national law, often resulting in subtle differences in implementation from one country to another.
Existing EU privacy rules derive from the 1995 Data Protection Directive, meaning that companies must deal with a patchwork of different interpretations across the EU.
In January 2012, the Commission drafted a new General Data Protection Regulation, which Parliament approved, with modifications, in March 2014. Representatives of EU member states have been haggling over amendments to it ever since, reaching a compromise text that should be acceptable to Parliament on Tuesday evening.
Parliament's Civil Liberties, Justice and Home Affairs Committee (LIBE) will vote on the text Thursday, and the European Council too must give its approval.
The level of fines is one of the more obvious points on which compromise was required. The original Commission proposal set the level at 2 percent of global revenue -- compared to a maximum of 10 percent in antitrust cases -- but Parliament wanted to crank that up to 5 percent.
The age limit for consent was a source of disagreement within the council: Unable to pick a number between 13 and 16, national representatives settled on allowing each country to choose its own age of majority for data protection purposes.
The negotiations over the General Data Protection Regulation ran in parallel with those on a related directive, on data protection standards for cross-border police cooperation. This is intended to allow security forces to exchange information about suspects while still protecting EU citizens' privacy.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.