Implications of the new EU Directive on data protection for multinational corporations

Abstract

The 1995 EU Directive on data protection legislation (DPL) ensures free flow of data within the EU. However, the transfer to countries without adequate DPL is generally forbidden. The effect of this Directive on the business of MNCs is still unknown but a few authors foresee major problems for MNCs doing business in Europe. On the eve of the implementation of the new EU data protection directive this preliminary study investigated some of the effects the new DPL Directive might have on MNCs doing business in Europe as seen by representatives of European and US MNCs. The study found that especially those companies transferring customer data across national boundaries are most affected by strict DPL. However, the effects mentioned by interviewees were, in contrast with popular literature on this topic, not exclusively negative. Several positive effects of strict privacy guidelines for MNCs could also be identified.