Why Brexit could cause data privacy problems for U.S. companies

06/30/2016

The U.K.’s departure from the EU could have serious consequences for international companies, which may need to rethink their data management policies.

“As a part of the European Union, there is a general directive that all nations abide by a guide,” says Greeman Yip, CEO of cloud consultancy BitTitan. “Now that the UK is not a part of the EU, the previous baseline directive that were adopted will change.”

When the UK is part of the EU it has the same data sovereignty laws as other countries in the EU. Now that it has departed, experts agree that data privacy laws will change. Although it is too early to determine exactly what the impact will be, experts encourage enterprises to examine the situation carefully.

The UK’s central role in U.S. companies’ international operations makes this an important issue. Many large U.S. cloud technology vendors have data center in the UK that act as hubs for Europe, says Dana Simberkoff, compliance and risks officer at SaaS consultancy AvePoint. Depending on how the GDPR rules shake out, it could push companies to expand their data footprint into other EU-member countries. “From a business perspective, Brexit may impact the development of new data centers in the U.K. as cloud providers may choose to pause those plans until the UK plans are clear,” Simberkoff wrote in an email.

According to Doug Loweve, the vice president of international sales for Interzion, a company that offers data center and collocation space across Europe, expanding beyond the UK and into Europe isn’t necessarily a bad thing for companies with international footprints. “Brexit has put a bright spotlight on the need to look at where your data sits, both for data privacy and performance.”

According to research firm Gartner, Brexit will cause some trepidation in the IT market as these data privacy issues are sorted out. “Now many new long-term strategic projects will be put on pause and likely not restarted until 2017,” the research firm noted.

Yip, with BitTitan, is more optimistic. “Bottom line – the UK is the most stable country in EMEA in which to do business,” he says. “This is the UK’s opportunity to blaze their own trail in the cloud, away from the EU and arguably in a manner more favorable to tech companies looking to innovate while operating under its governing umbrella. In a few years, the EU might be reworking their own regulations to abide by the standards established in the UK.”