Amid confusion, EU data privacy law goes into effect

LONDON -- Lars Andersen's business handles some of the most sensitive data there is -- the names and phone numbers of children.

The owner of London-based My Nametags, which makes personalized nametags to iron into children's clothing, says protecting such information is fundamental to his business, which operates in 130 countries.

But starting Friday, My Nametags and most other companies collecting or processing the personal information of EU residents must take a number of extra precautions to comply with the new General Data Protection Regulation, which the EU calls the most sweeping change in data protection rules in a generation.

While the legislation has been applauded for tackling the thorny question of personal data privacy, the rollout is also causing confusion. Companies are trying to understand what level of protection different data needs, whether this could force them to change the way they do business and innovate, and how to manage the EU's 28 national data regulators, who enforce the law.

"Once you try to codify the spirit (of the law) -- then you get unintended consequences," Andersen said. "There's been a challenge for us: What actually do I have to do? There are a million sort of answers."

That uncertainty, together with stiff penalties for violating the law, has convinced internet-based businesses such as Unroll.me, an inbox management firm, and gaming company Ragnarok Online to block EU users from their sites. Pottery Barn, an arm of San Francisco-based housewares retailer Williams-Sonoma Inc., said it would no longer ship to EU addresses. The Los Angeles Times newspaper said it was temporarily putting its website off limits in most EU countries.

The implementation of GDPR has also made data protection an issue in contract negotiations as firms argue about how to divvy up responsibility for any data breach.

"Deals are being held up by data protection," said Phil Lee, a partner in privacy security and information at Fieldfisher, a law firm with offices in 18 EU cities. "If something goes wrong, what happens?"

EU countries themselves aren't quite ready for the new rules. Less than half of the 28 member states have adopted national laws to implement GDPR, though the laggards are expected to do so in the next few weeks, according to WilmerHale, an international law firm.

As with most EU-wide regulations, enforcement of the new data protection rules falls to national authorities. While the EU stresses the law applies to everyone, one of the big outstanding questions is whether regulators will go after any entity breaking the law or simply focus on data giants such as Google and Facebook.

Lawyers also say it isn't yet clear how regulators will interpret the sometimes general language written into the law. For example, the law says processing of personal data must be "fair" and data should be held "no longer than necessary."

"It's time to put on your seatbelt and check your airbag," said D. Reed Freeman Jr., a privacy and cybersecurity expert at WilmerHale. "It's kind of like a lift-off with a rocket. It's about to launch."