The Impact of GDPR on Business

The Internet has drastically changed in the past few years. Consumers have now become very aware of their privacy issues. Many consumers want to be in control of the data that they create and share online. Till now, the contracts used to be drawn by social media companies. Hence, they were heavily skewed to be in favor of such companies. However, European regulators started taking notice that the customers are being negatively affected due to the lack of proper regulation. It is for this reason that they created the General Data Protection Regulation (GDPR).

Like every policy, the GDPR has its own pros and cons. In this article, we will have a closer look at what the General Data Protection Regulation (GDPR) really is and how it impacts businesses all across the world.

What is the General Data Protection Regulation (GDPR)?

As mentioned earlier in the article, GDPR is a new set of regulations that have been created by European regulators. There have been several such regulations which have been created all over the world. However, none of them had serious intentions which actually made a difference. This is where the General Data Protection Regulation (GDPR) stands out. The data privacy rules which the corporations are supposed to follow under General Data Protection Regulation (GDPR) are stringent. The penalties for not following them are pretty steep as well. Here are some examples of what makes GDPR different.

  • The General Data Protection Regulation (GDPR) does not only apply to business entities which are registered in Europe. It does not matter where the business entity has been registered. As long as the products or services are being sold to customers from Europe, it is the duty of the companies to comply with the General Data Protection Regulation (GDPR) norms.
  • These new data norms expect companies to appoint a dedicated GDPR officer who will be responsible for following all compliance norms. If the company fails to comply with the very extensive norms mentioned by General Data Protection Regulation (GDPR), the penalty is 20 million Euros or 4% of the global turnover of companies, whichever is greater! This is a huge penalty. Companies which sell products and services online are not used to such serious regulations. This is a drastic change which the companies are having a difficult time adapting to.

The Benefits of GDPR

  • Consent Is Paramount: The good thing about GDPR is that it provides maximum importance to consumer consent. Companies cannot use long contracts to sneak in clauses which customers do not read. The companies are expected to get explicit consent about the type of data that they will collect as well as how they will process it. It does not matter whether the data processing happens within the European Union or not. As long as the data belongs to an EU citizen, the General Data Protection Regulation (GDPR) is applicable.
  • Right to Be Forgotten: Another big achievement of the General Data Protection Regulation (GDPR) is that it provides consumers with the right to be forgotten. This means that even if we agree to share certain data today, we can change our minds later. For instance, if we agreed to share our credit card information with a company today, we can later ask them to delete our credit card information or our entire account. For the first time in the history of data protection laws, the right to be forgotten has been provided to consumers. Digital companies can no longer show backdated contracts signed by customers and hold them hostage. If the customers want the data to be deleted now, this instruction supersedes the previous ones, and the digital companies are legally bound to delete all data that has been requested by the customer.

The Disadvantages of GDPR

  • Has Caused Spam: The biggest problem with the General Data Protection Regulation (GDPR) is that it has caused spam on a massive scale. This is strange given the fact that the purpose of GDPR is to stop spam. Millions of e-mails have been triggered asking users whether they offer their consent for the use of data. Since several companies are sending these e-mails simultaneously, consumers are not able to differentiate the details. Many of them are just blindly clicking on “I agree.” This ends up defeating the whole purpose of the General Data Protection Regulation (GDPR) exercise.
  • Helps Bigger Companies: The General Data Protection Regulation (GDPR) increases a huge amount of complexity in online business. Every business needs to be compliant regardless of their turnover. Compliance is expensive for the small businesses. Larger businesses find it easier and cheaper to comply with these norms. This is the reason why Google and Facebook, which were supposed to be the most affected by the General Data Protection Regulation (GDPR) are actually the biggest beneficiaries. This regulation makes it difficult for smaller companies to compete with the larger ones.
  • Marketing Efforts Redesigned: E-mail marketing has become a lot more expensive and time-consuming. Data lists now have to be General Data Protection Regulation (GDPR) compliant. Also, the information collected on social media websites has to be stored, shared and used carefully. The entire process of digital marketing is likely to take a huge hit.

To sum it up, the General Data Protection Regulation (GDPR) has some pros and cons. However, the benefits largely accrue to the consumers and the big businesses. The small businesses are the ones who have to bear the cost of this increased regulation.


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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


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