What is data localisation and why does it matter to your business?

Around the world, rules are tightening about how you collect, store and handle data.

by Paul Simpson
Last Updated: 19 Feb 2019

Data localisation is the increasing drive by governments to regulate the use of data within their jurisdiction.

Some countries, notably China, are motivated by the need to censor debate. Since 2014, data operators in Russia have been legally required to ensure that the recording, systemisation, accumulation, storage, update, amendment and retrieval of citizens’ personal data is done on databases based in that country.

In the European Union, data privacy is perceived as a human right. Headlines about the US National Security Agency’s electronic eavesdropping – and Facebook’s selling of personal data – have made EU officials reluctant to guarantee cross-border data flows in any trade deals.

There is also a growing recognition that data is a commercially valuable commodity – often described as the 21st-century equivalent of oil – and that, so far, almost all of that revenue accrues to companies, not to people or governments. 

How far will it go?

Eric Schmidt, former CEO of Google, recently predicted that the internet would stop being global and split into two at some point in the future, with one part led by China and another by the US. The New York Times suggested that the disaggregation would go further, with Europe, and its groundbreaking GDPR rules, leading its own part.

Martina F Farracane, at the European Centre for International Political Economy, says government restrictions on the flow of data have "mushroomed in the last decade". In Vietnam, data handlers must build at least one server in the country. In Australia, personal health information cannot be exported.

Even within the US-led internet, crucial differences may emerge. California, for example, has already adopted GDPR-style regulations over personal data. 

What does it mean for business?

The big questions about a disaggregated internet, raised by the New York Times, are: "What sorts of ideas and speech will become bound by borders? What will a disconnected world do to innovation and scientific progress? And would the partitioning of the internet slow, or even reverse, globalisation?"

The smaller concerns are around cost, complexity and risk management. There is opportunity here too if businesses are ready to share the wealth data creates with the people they harvest it from.

Image credit: panumas nikhomkhai/Pexels

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