GDPR vs. US Privacy Law: A Comparative Analysis

-- By CostanzaDejana - 02 Dec 2024

Introduction

The European Union's General Data Protection Regulation and the sectoral approach to the regulation of privacy in the United States are very different. While the former takes a comprehensive, rights-based approach, the latter takes a patchwork system more focused on economic growth and innovation. I will try to examine these regimes, compare the effectiveness of each, and discuss what they can learn from each other to meet the demands an increasingly globalized society places on these regulations.

Privacy Law

What's the main purpose of privacy law? I'd say: to make sure that personal information is duly protected, and those in charge of collecting and processing it are responsible for such material. The Europeans consider privacy a fundamental right of humans; it forms part of their culture and is deeply enshrined in the European Convention on Human Rights and the Charter of Fundamental Rights of the EU. These have formed the backbone of the General Data Protection Regulation (“GDPR”) that came into effect in 2018 to create one single robust system to protect data across EU member states. The US, on the other hand, does not have one single federal privacy law regulating data protection across the board. In contrast, privacy regulation is sectoral and even varies from state to state. This is a reflection of an American preference for free-market principles and limited government intervention. While this provides room for flexibility, this kind of decentralized approach is also fraught with inconsistencies and lack of enforcement. Traditionally, privacy laws in the US have been reactive rather than part of a proactive and all-inclusive strategy. The GDPR has been revolutionary in global privacy law, setting a high watermark for how personal data should be processed. It applies not only to organizations within the EU but also to any company that processes the personal data of EU residents, no matter where they are located. This extraterritorial scope makes GDPR a global influence.

GDPR

Some of the key principles under GDPR include: (i) Data Minimization: organizations should not collect data other than that which is absolutely necessary for certain purposes; (ii) the Right to Be Forgotten: under specific circumstances, individuals are entitled to request the erasure of their personal information; (iii) Consent: when companies want to obtain or use data, consent should be explicit and knowledgeable; (iv) Data Breach Notifications: Organizations, in case of a breach, shall notify the concerned authorities within 72 hours; (v) Enforcement and Penalties: the penalty for non-compliance may be as high as €20 million or, in the case of a company, up to 4% of its total worldwide annual turnover; and (vi) the GDPR creates DPAs in every state of the EU to supervise conformity. They are expected to operate separately under their respective laws and together cooperate for harmony. The criticism regarding GDPR is that its intricacy and high expenditure costs even burden the small business enterprises immensely. No doubt, with regards to bringing data privacy in everyone's eye in this world was done with the help of it, in every business.

US Approach

Regulation in the United States is much less centralized. It is industry-specific and in some instances state-by-state. It certainly is consistent with a more free-market view where economic development might take precedent over oversight. Key Federal Laws Include: 1. California Consumer Privacy Act: CCPA grants rights to the residents of California most similar to those given to the residents by GDPR. Precisely, people have a right to see their information and request deletion of their information. 2. Children's Online Privacy Protection Act: Concerns information collection from children under 13 years, for which parental consent is required. 3. Health Insurance Portability and Accountability Act (HIPAA): Regulates how health information is stored and shared. State laws add even more complexity, such as the Consumer Data Protection Act of Virginia - VCDPA - and Colorado's Privacy Act. And so, without a federal rule, it really does get very, very cumbersome to maintain state-by-state compliance for an enterprise. In most cases, the US system allows economic flexibility rather than strictly protecting the privacy of individuals. The mechanisms of enforcement are weaker; penalties for non-compliance are not as serious as in GDPR. This reduces the incentive for businesses to apply fully the standards of privacy.

Comparison

It considers the right to privacy a fundamental right of humans and part of the basic building block of society. On the other hand, the US treats the concept of privacy more as an issue of consumer protection and weighs it against the imperative for innovation and economic growth. This, in turn, makes the GDPR framework predictable for businesses operating throughout the EU, following one rulebook, whereas in the US, its patchwork approach in many business cases requires following various different laws, which most of the time are too burdensome and inefficient. While substantial fines and independent DPAs form part of the enforcement mechanics, GDPR indeed guarantees compliance. Penalties are not strong in the US, and the enforcement is pretty inconsistent, undermining consumer trust. Even as the GDPR presents higher compliance costs, it grants more transparency to people about their data. This system is more business-friendly, but this far too frequently comes at the high cost of consumer privacy. GDPR enforces rigid requirements on data transfers outside the EU, putting "adequacy" standards on third countries. This has made transatlantic data flows very difficult, hence the agreements such as the EU-US Data Privacy Framework that is still controversial. The US, in turn, takes a more business-friendly approach by allowing more flexibility in cross-border data sharing.

Conclusion

The comprehensive structure reflected in the GDPR represents Europe's commitment to privacy as a human right, while flexibility and innovation remain in hand in the US system. As the digital landscape continuously changes, both systems can really learn from each other-some added flexibility for Europe, maybe, and some more harmony for the US approach. The right way to tackle the nuances of privacy in the online world is to cooperate across borders - since in they online world, they don't exist.