27. November 2020
In the course of November 2020, the Council of the European Union issued several draft versions of a joint declaration with the working title “Security through encryption and security despite encryption”. The drafts were initially intended only for internal purposes, but leaked and first published by the Austrian brodcasting network “Österreichischer Rundfunk” (“ORF”) in an article by journalist Erich Möchel. Since then, the matter has sparked widespread public interest and media attention.
The controversy around the declaration arose when the ORF commentator Möchel presented further information from unknown sources that “compentent authorities” shall be given “exceptional access” to the end-to-end encryption of communications. This would mean that communications service providers like WhatsApp, Signal etc. would be obliged to allow a backdoor and create a general key to encrypted communications which they would deposit with public authorities. From comparing the version of the declaration from 6 November 2020 with the previous version from 21 October 2020, he highlighted that in the previous version it states that additional practical powers shall be given to “law enforcement and judicial authorities”, whereas in the more recent version, the powers shall be given to “competent authorities in the area of security and criminal justice”. He adds that the new broader wording would include European intelligence agencies as well and allow them to undermine end-to-end encryption. Furthermore, he also indicated that plans to restrict end-to-end encyption in Western countries are not new, but originally proposed by the “Five Eyes” intelligence alliance of the United States, Canada, United Kingdom, Australia and New Zealand.
As a result of the ORF article, the supposed plans to restrict or ban end-to-end encryption have been widely criticised by Politicians, Journalists, and NGOs stating that any backdoors to end-to-end encryption would render any secure encryption impossible.
However, while it can be verified that the “Five Eyes” propose the creation of general keys to access end-to-end encrypted communications, similar plans for the EU cannot be clearly deduced from the EU Council’s declaration at hand. The declaration itself recognises end-to-end encryption as highly beneficial to protect governments, critical infrastructures, civil society, citizens and industry by ensuring privacy, confidentiality and data integrity of communications and personal data. Moreover, it mentions that EU data protection authorities have identified it as an important tool in light of the Schrems II decision of the CJEU. At the same time, the Council’s declaration illustrates that end-to-end encryption poses large challenges for criminal investigations when gathering evidencein cases of cyber crime, making it at times “practically impossible”. Lastly, the Council calls for an open, unbiased and active discussion with the tech industry, research and academia in order to achieve a better balance between “security through encryption and security despite encryption”.
Möchel’s sources for EU plans to ban end-to-end encryption through general keys remain unknown and unverifiable. Despite general concerns for overarching surveillance powers of governments, the public can only approach the controversy around the EU Council’s declaration with due objectivity and remain observant on whether or how the EU will regulate end-to-end encryption and find the right balance between the privacy rights of European citizens and the public security and criminal justice interests of governments.
The President of the Personal Data Protection Office in Poland (UODO) imposed an admonition on a company dealing with waste management liable for a data breach and ordered to notify the concerned data subjects. The admonition is based on a violation of personal data pertaining to data subjects under medical quarantine. The city name, street name, building/flat number and the fact of remaining under quarantine of the affected data subjects have been provided by the company to unauthorized recipients. The various recipients were required to verify whether, in a given period, waste was to be collected from places determined in the above-mentioned list.
The incident already happened in April 2020. Back then, a list of data subjects was made public, containing information on who had been quarantined by the administrative decision of the District Sanitary-Epidemiological Station (PPIS) in Gniezno as well as information on quarantined data subjects in connection with crossing the country border and on data subjects undergoing home isolation due to a confirmed SARS-CoV-2 infection. After becoming aware of the revelation, the Director of PPIS notified the relevant authorities – the District Prosecutor’s Office and the President of UODO – about the incident.
PPIS informed them that it had carried out explanatory activities showing that the source of disclosure of these data was not PPIS. These data were provided to the District Police Headquarters, the Head of the Polish Post Office, Social Welfare Centres and the Headquarters of the State Fire Service. Considering the fact that these data had been processed by various parties involved, it was necessary to establish in which of them the breach may have occurred.
UODO took steps to clarify the situation. In the course of the proceedings, it requested information from a company dealing with waste management being one of the recipients of the personal data. The company, acting as the data controller, had to explain whether, when establishing the procedures related to the processing of personal data, it had carried out an assessment of the impact of the envisaged processing operations on the protection of personal data according to Art. 35 GDPR. The assessment persists in an analysis of the distribution method in electronic and paper form in terms of risks related to the loss of confidentiality. Furthermore, the data controller had to inform UODO about the result of this analysis.
The data controller stated that it had conducted an analysis considering the circumstances related to non-compliance with the procedures in force by data processors and circumstances related to theft or removal of data. Moreover, the data controller expressed the view that the list, received from the District Police Headquarters, only included administrative (police) addresses and did not contain names, surnames and other data allowing the identification of a natural person. Thus, the GDPR would not apply, because the data has to be seen as anonymized. However, from the list also emerged the fact that residents of these buildings/flats were placed in quarantine, which made it possible to identify them. It came out that the confidentiality of the processed data had been violated in the course of the performance of employee duties of the data processor, who had left the printed list on the desk without proper supervision. During this time, another employee had recorded the list in the form of a photo and had shared it with another person.
Following the review of the entirety of the collected material in this case, UODO considered that the information regarding the city name, street name, building/flat number and placing a data subject in medical quarantine, constitute personal data within the meaning of Art. 4 (1) GDPR, while the last comprises a special category of personal data concerning health according to Art. 9 (1) GDPR. Based on the above, it is possible to identify the data subjects, and therefore the data controller is bound to the obligations arising from the GDPR.
In the opinion of UODO, the protective measures indicated in the risk analysis are general formulations, which do not refer to specific activities undertaken by authorized employees. The measures are insufficient and inadequate to the risks of processing special categories of data. In addition, the data controller should have considered factors, such as recklessness and carelessness of employees and a lack of due diligence.
According to Art. 33 (1) GDPR, the data controller shall without undue delay and, where feasible, not later than 72 hours after having become aware of the data breach, notify it to the competent supervisory authority. Moreover, in a situation of high risk to the rights and freedoms of the data subjects, resulting from the data breach (which undoubtedly arose from the disclosure), the data controller is obliged to inform the data subject without undue delay in accordance with Art. 34 (1) GDPR. Despite this, the company did not report the infringement, neither to the President of UODO nor to the concerned data subjects.
The European Commission (“EC”) aims for an ecosystem of cheap, versatile, and secure EU-internal data transfers, so data transfers into non-EU-regions are less needed. For this goal, the EC proposed the “Data Governance Act” on November 25th, as a part of its “2020 European strategy for data“. These strategies are intended in order to open up new ways of sharing data that is collected by companies and the public sector, or freely shared by individuals, while increasing public trust in data sharing by implementing several measures, such as establishing “data sharing intermediaries”. Combined with the Gaia-X project and several measures to follow, the Data Governance Act sets the basis to create a domestic data market that offers more efficiency of data transfers to the businesses, while also ensuring that GDPR standards are preserved. Key industries in the focus of this agenda are the agricultural, environmental, energy, finance, healthcare and mobility sectors as well as public administration.
During her speech presenting the Data Governance Act, Margarethe Vestager, Executive Vice President of the European Commission for A Europe Fit for the Digital Age, said that there are huge amounts of data produced every day, but not put to any productive use. As examples she names road traffic data from GPS, healthcare data that enables better and faster diagnosis, or data tracking heat usage from house sensors. The amount of data produced is only going to increase exponentially in the years to come. Vestager sees a lot of potential in this unused data and states the industry has an interest in using this data, however it lacks the tools to harness it.
EU based neutral data sharing intermediaries, who serve as safe data sharing organizers, are a key factor in this project. Their role is supposed to boost the willingness of sharing personal data whilst preserving the initial owner’s control. Therefore, intermediaries are not allowed to use the data for themselves, but function as neutral third-parties, transferring data between the data holder and the data user. Furthermore, intermediaries are to organize and combine different data in a neutral way, so no company secrets can be abused and the data is only used for the agreed purpose. Before they start operating, intermediates are required to notify the competent authority of their intention to provide data-sharing services.
New laws are going to ensure that sensitive and confidential data – such as intellectual property rights – can be shared and reused, while a legitimate level of protection is maintained. The same applies to data shared by individuals voluntarily. Individuals will be able to share personal data voluntarily in so-called “personal data spaces”. Once businesses will get access to these, they benefit from large amounts of data for low costs, no effort and on short notice. Vestager introduces the example of an individual suffering from a rare illness, who could provide data of his medical tests into such a personal data space, so businesses can use this data to work on treatments. Further examples are improvements in the management of climate change and the development of more precise farming tools.
To ensure the trust of potential participants, each EU-member-state is supposed to implement new competent authorities that are tasked with implementing and enforcing the Data Governance Act. A new EU-institution, the “European Data Innovation Board”, will be implemented and tasked with informing the EC about new data innovations and working out guidelines on how to implement these innovations into practice.
A more fluent exchange between different kinds of technical expertise is the hoped-for outcome of these changes, as a means to diminish the influence of big tech companies from the U.S. and China.
The Data Governance Act now needs to go through the regular legislative process. A timetable for when it is supposed to come into effect has not yet been set.
26. November 2020
On November 19th, the European Data Protection Board (EDPB) met for its 42nd plenary session. During the session, the EDPB presented two new Standard Contractual Clauses (SCCs) drafts, which have been developed after the Schrems II decision to give more legal certainty to data transfers, as well as extended the public consultation period on transfer mechanisms until the 21st of December 2020.
The drafts presented by the EDPB include one set of SCCs for contracts between controllers and processors, and another one for data transfers outside the EU.
The first are completely new, and have been developed by the Commission in accordance with Art. 28 (7) GDPR and Art. 29 (7) of Regulation 2018/1725. This set of SCCs is intended for EU-wide application, and the Commission drafted them with the aim to ensure full harmonisation and legal certainty across the EU for contracts between controllers and processors.
The second set of drafts is a new take on the SCCs as transfer mechanisms according to Art. 46 (2) (c) GDPR. These SCCs will replace the existing SCCs for international transfers that were adopted on the basis of Directive 95/46 and needed to be updated to bring them in line with GDPR requirements, as well as with the CJEU’s ‘Schrems II’ ruling, and to better reflect the widespread use of new and more complex processing operations often involving multiple data importers and exporters.
The Commission requested a joint opinion from the EDPB and the EDPS on the implementation on both sets of SCCs.
During the plenary, the Members of the Board also decided to extend the deadline for the public consultation on the recommendations on measures that supplement transfer tools to ensure compliance with EU level of protection of personal data from, originally, 30th November 2020 until 21st December 2020.
The EDPB further adopted a statement on the future ePrivacy Regulation and the future role of supervisory authorities and the EDPB in this context during the plenary. The EDPB underlines that many of the provisions of the future ePrivacy Regulation relate to the processing of personal data and that many provisions of the GDPR and the ePrivacy Regulation are closely intertwined. The most efficient way to have consistent interpretation and enforcement of both sets of rules would therefore be fulfilled if the enforcement of those parts of the ePrivacy Regulation and the GDPR would be entrusted to the same authority. The EDPB further underlined the necessity to adopt the new Regulation as soon as possible.
24. November 2020
Microsoft (“MS”) is among the first companies to react to the European Data Protection Board’s data transfer recommendations (please see our article), as the tech giant announced in a blog post on November 19th. MS calls these additional safeguards “Defending Your Data” and will immediately start implementing them in contracts with public sector and enterprise customers.
In light of the Schrems II ruling by the Court of Justice of the European Union (“CJEU”) on June 16th, the EDPB issued recommendations on how to transfer data into non-EEA countries in accordance with the GDPR on November 17th (please see our article). The recommendations lay out a six-step plan on how to assess whether a data transfer is up to GDPR standards or not. These steps include mapping all data transfer, assessing a third countries legislation, assessing the tool used for transferring data and adding supplementary measures to that tool. Among the latter is a list of technical, organizational, and contractual measures to be implemented to ensure the effectiveness of the tool.
Julie Brill, Corporate Vice President for Global Privacy and Regulatory Affairs and Chief Privacy Officer at Microsoft, issued the statement in which she declares MS to be the first company responding to the EDPB’s guidance. These safeguards include an obligation for MS to challenge all government requests for public sector or enterprise customer data, where it has a lawful basis for doing so; to try and redirect data requests; and to notify the customer promptly if legally allowed, about any data request by an authority, concerning that customer. This was one of the main ETDB recommendations and also included in a draft for new Standard Contractual Clauses published by the European Commission on November 12th. MS announces to monetary compensate customers, whose personal data has to be disclosed in response to government requests. These changes are additions to the SCC’s MS is using ever since Schrems II. Which include (as MS states) data encrypted to a high standard during transition and storage, transparency regarding government access requests to data (“U.S. National Security Orders Report” dating back to 2011; “Law Enforcement Requests Report“) .
Recently European authorities have been criticizing MS and especially its Microsoft 365 (“MS 365”) (formerly Office 365) tools for not being GDPR compliant. In July 2019 the Ministry of Justice in the Netherlands issued a Data Protection Impact Assessment (DPIA), warning authorities not to use Office 365 ProPlus, Windows 10 Enterprise, as well as Office Online and Mobile, since they do not comply with GDPR standards. The European Data Protection Supervisor issued a warning in July 2020 stating that the use of MS 365 by EU authorities and contracts between EU institutions and MS do not comply with the GDPR. Also, the German Data Security Congress (“GDSC”) issued a statement in October, in which it declared MS 365 as not being compliant with the GDPR. The GDSC is a board made up of the regional data security authorities of all 16 german states and the national data security authority. This declaration was reached by a narrow vote of 9 to 8. Some of the 8 regional authorities later even issued a press release explaining why they voted against the declaration. They criticized a missing involvement and hearing of MS during the process, the GDSC’s use of MS’ Online Service Terms and Data Processing Addendum dating back to January 2020 and the declaration for being too undifferentiated.
Some of the German data protection authorities opposing the GDSC’s statement were quick in welcoming the new developments in a joint press release. Although, they stress that the main issues in data transfer from the EU to the U.S. still were not solved. Especially the CJEU main reserves regarding the mass monitoring of data streams by U.S. intelligence agencies (such as the NSA) are hard to prevent and make up for. Still, they announced the GDSC would resume its talks with MS before the end of 2020.
This quick reaction to the EDPB recommendations should bring some ease into the discussion surrounding MS’ GDPR compliance. It will most likely help MS case, especially with the German authorities, and might even lead to a prompt resolution in a conflict regarding tools that are omnipresent at workplaces all over the globe.
23. November 2020
At the end of October 2020, China issued a draft for a new „Personal Information Protection Law” (PIPL). This new draft is the introduction of a comprehensive system in terms of data protection, which seems to have taken inspiration from the European General Data Protection Regulation (GDPR).
With the new draft, China’s regulations regarding data protection will be consisting of China’s Cybersecurity Law, Data Security Law (draft) and Draft PIPL. The new draft legislation contains provisions relating to issues presented by new technology and applications, all of this in around 70 articles. The fines written in the draft for non-compliance are quite high, and will bring significant impact to companies with operations in China or targeting China as a market.
The data protection principles drawn out in the draft PIPL include transparency, fairness, purpose limitation, data minimization, limited retention, data accuracy and accountability. The topics that are covered include personal information processing, the cross-border transfer of personal information, the rights of data subjects in relation to data processing, obligations of data processors, the authority in charge of personal information as well as legal liabilities.
Unlike China’s Cybersecurity Law, which provides limited extraterritorial application, the draft PIPL proposes clear and specific extraterritorial application to overseas entities and individuals that process the personal data of data subjects in China.
Further, the definition of “personal data” and “processing” under the draft PIPL are very similar to its equivalent term under the GDPR. Organizations or individuals outside China that fall into the scope of the draft PIPL are also required to set up a dedicated organization or appoint a representative in China, in addition to also report relevant information of their domestic organization or representative to Chinese regulators.
In comparison to the GDPR, the draft PIPL extends the term of “sensitive data” to also include nationality, financial accounts, as well as personal whereabouts. However, sensitive personal information is defined as information that once leaked or abused may cause damage to personal reputation or seriously endanger personal and property safety, which opens the potential for further interpretation.
The draft legislation also regulates cross-border transfers of personal information, which shall be possible if it is certified by recognized institutions, or the data processor executes a cross-border transfer agreement with the recipient located outside of China, to ensure that the processing meets the protection standard provided under the draft PIPL. Where the data processor is categorized as a critical information infrastructure operator or the volume of data processed by the data processor exceeds the level stipulated by the Cyberspace Administration of China (CAC), the cross-border transfer of personal information must pass a security assessment conducted by the CAC.
It further to keep in mind that the draft PIPL enlarges the range of penalties beyond those provided in the Cybersecurity Law, which will put a much higher pressure on liabilities for Controllers operating in China.
Currently, the period established to receive open comments on the draft legislation has ended, but the next steps have not yet been reported, and it not yet sure when the draft legislation will come into full effect.
20. November 2020
On November 3rd 2020, Californian citizens were able to vote on the California Privacy Rights Act of 2020 (“CPRA”) in a state ballot (we reported). As polls leading up to the vote already suggested, California voters approved the new Privacy legislation, also known as “Prop 24”. The CPRA was passed with 56.2% of Yes Votes to 43.8% of No Votes. Most provisions of the CPRA will enter into force on 1 January 2021 and will become applicable to businesses on 1 January 2023. It will, at large, only apply to information collected from 1 January 2022.
The CPRA will complement and expand privacy rights of California citizens considerably. Among others, the amendments will include:
- Broadening the term “sale” of personal information to “sale or share” of private information,
- Adding new requirements to qualify as a “service provider” and defining the term “contractor” anew,
- Defining the term “consent”,
- Introducing the category of “Sensitive Information”, including a consumer’s Right to limit the use of “Sensitive Information”,
- Introducing the concept of “Profiling” and granting consumers the Right to Opt-out of the use of the personal information for Automated Decision-Making,
- Granting consumers the Right to correct inaccurate information,
- Granting consumers the Right to Data Portability, and
- Establishing the California Privacy Protection Agency (CalPPA) with a broad scope of responsibilities and enforcement powers.
Ensuring compliance with the CPRA will require proper preparation. Affected businesses will have to review existing processes or implement new processes in order to guarantee the newly added consumer rights, meet the contractual requirements with service providers/contractors, and show compliance with the new legislation as a whole.
In an interview after the passage of the CPRA, the initiator of the CCPA and the CPRA Alastair Mactaggard commented that
Privacy legislation is here to stay.
He hopes that California Privacy legislation will be a model for other states or even the U.S. Congress to follow, in order to offer consumers in other parts of the country the same Privacy rights as there are in California now.
During its 41st plenary session, the European Data Protection Board (EDPB) adopted by a two-thirds majority of its members its first dispute resolution decision under Art. 65 GDPR regarding Twitter International Company. The binding decision aims to resolve a dispute arisen from a draft decision by the Irish supervisory authority, being the lead supervisory authority in that case, and subsequent relevant and reasoned objections raised by several authorities concerned.
The Irish supervisory authority prepared a draft decision following an own-initiative investigation into Twitter International Company, after the company had notified the Irish supervisory authority of a personal data breach on January 8th, 2019. According to Art. 60 (3) GDPR, the Irish supervisory authority submitted its draft decision to the other authorities concerned in May 2020, which had the opportunity to express their objections within a period of four weeks afterwards. They referred to, inter alia, violations of the GDPR identified by the lead supervisory authority, the role of Twitter International Company as the sole data controller, and the quantification of the proposed fine.
Due to the fact that the lead supervisory authority rejected the objections and/or considered them not to be “relevant and reasoned”, it submitted the matter to the EDPB pursuant to Art. 60 (4) GDPR, thus initiating the dispute resolution procedure.
Thereupon, the completeness of the file was evaluated, that led to the institution of legal proceedings stated in Art. 65 GDPR on September 8th, 2020. In accordance with Art. 65 (3) GDPR and in conjunction with Art. 11.4 of the EDPB Rules of Procedure, the default time period of one month was extended by a further month on account of the complexity of the subject-matter.
On November 9th, 2020, the EDPB adopted its binding decision and will shortly notify it to the Irish supervisory authority, which, on the other hand, will issue a final decision. It will be addressed to the data controller without undue delay and at the latest by one month after the EDPB has notified its decision. In compliance with the requirements of Art. 65 (6) GDPR, the lead supervisory authority shall inform the EDPB of the date when its final decision is notified respectively to the controller. After that, the EDPB decision will be published on its website.
18. November 2020
On November 17th, Navdeep Bains, the Canadian Minister of Information Science and Economic Development, introduced Bill C-11, which is intended to modernize and reshape the Canadian privacy framework and to comply with EU and U.S. legislation. Its short title is Digital Charter Implementation Act,2020 (DCIA). A fact sheet accompanying the DCIA states:
“… If passed, the DCIA would significantly increase protections to Canadians’ personal information by giving Canadians more control and greater transparency when companies handle their personal information. The DCIA would also provide significant new consequences for non-compliance with the law, including steep fines for violations. …”
Part one of the DCIA is the Consumer Privacy Protection Act (CPPA), which is intended to establish a new privacy law in the Canadian private sector. New consent rules are to be adopted, data portability is introduced as a requirement, the subject’s access to its personal data is enhanced as well as their rights to erase personal data. Data subjects further have the right to request businesses to explain how a prediction, recommendation, or decision was reached that was made by an automated decision-making system. Furthermore, they have the right to know how personal data is being used, as well as the right to review and challenge the amount of personal data that is being collected by a company or government. On demand, a privacy management program must be provided to the Canadian Office of the Privacy Commissioner (OPC). For non-compliance companies face possible fines up to 5% of the company’s global revenue, or C$25 Million, whichever is higher. According to Bains, these are the highest fines in all the G7-nations. Businesses can ask the OPC to approve their codes of practice and certification systems, and in socially beneficial cases, disclose de-identified data with public entities.
Bill C-11 further contains the “Personal Information and Privacy Protection Tribunal Act”, which is supposed to make enforcement of privacy rights faster and more efficient. For that purpose, more resources are committed to the OPC. The OPC can now issue “orders”, which have the same effect as Federal Court orders. Further, the OPC may force companies to comply or order them to stop collecting and using personal data. The newly formed Data Protection Tribunal can raise penalties and hear appeals regarding orders issued by the OPC.
Lastly, a private right of action is also included in the bill. This allows individuals to sue companies within two years after the commissioner issues a finding of privacy violation that is upheld by the Tribunal.
A day after the European Data Protection Board (EDPB) issued its recommendations on supplementary measures, on November 12th the European Commission issued a draft on implementing new Standard Contractual Clauses (SCCs) for data transfers to non-EU countries (third countries). The draft is open for feedback until December 10th, 2020, and includes a 12-month transition period during which companies are to implement the new SCCs. These SCCs are supposed to assist controllers and processors in transferring personal data from an EU-country to a third-country, implementing measures that guarantee GDPR-standards and regarding the Court of Justice of the European Union’s (CJEU) “Schrems II” ruling.
The Annex includes modular clauses suitable for four different scenarios of data transfer. These scenarios are: (1) Controller-to-controller-transfer; (2) Controller-to-processor-transfer; (3) Processor-processor-transfer; (4) Processor-to-controller-transfer. Newly implemented in these SCCs are the latter two scenarios. Since the clauses in the Annex are modular, they can be mixed and matched into a contract fitting the situation at hand. Furthermore, more than two parties can adhere to the SCC and the modular approach even allows for additional parties to accede later on.
The potential of government access to personal data is distinctly addressed, since this was a main issue following the “Schrems II” ruling. Potential concerns are met by implementing clauses that address how the data importer must react when laws of the third country impinge on his ability to comply with the contract, especially the SCCs, and how he must react in case of government interference. Said measures include notifying the data exporter and the data subject of any government interference, such as legally binding requests of access to personal data, and, if possible, sharing further information on these requests on a regular basis, documenting them and challenging them legally. Termination clauses have been added, in case the data importer cannot comply further, e.g. because of changes in the third country’s law.
Further clauses regard matters such as data security, transparency, accuracy and onwards transfer of personal data, which represent issues that have all been tackled in the older SCCs, but are to be updated now.
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