Facebook and Cambridge Analytica: Would the GDPR have helped?

It’s a modern-day truism that when you use a “free” online service, you’re still paying – not with your money, but with your personal information. This is simply the reality for many of the services we’ve come to rely on in our daily lives, and for most it’s an acceptable (if sometimes creepy) bargain.

But what if you’re paying for online services not just with your own personal information, but with that of your friends and family? And what if the information you’re handing over is being shared with others who might use it for purposes you didn’t consider when you signed up – maybe for research purposes, maybe to advertise to you, or maybe even to influence the way you vote?

Last week it emerged that an organisation called Cambridge Analytica may have used personal information scraped from Facebook to carry out targeted political advertising. The information was obtained when Facebook users accessed a psychometric profiling app called thisisyourdigitallife – but the data that was collected wasn’t just about app users, it was also about their Facebook friends (more on that below).

It’s what we’re now seeing from consumers that’s interesting.  People are rightfully asking for an explanation. Whilst we seem to have been asleep at the wheel over the last few years, as data empires around the world have pushed the boundaries, the current Facebook debacle is leading us to ask questions about the value of these so-called “free” services, and where the lines should be drawn.  The next few weeks will be telling, in terms of whether this really is the “tipping point” as many media commentators are calling it, or just another blip, soon forgotten.

In any case, with only a few months until the EU General Data Protection Regulation (GDPR), comes into force, this blog post asks:  If GDPR was operational now, would consumers be better protected?

First, some background

There’s plenty of news coverage out there covering the details, so we’ll just provide a quick summary of what happened.

A UK-based firm called Global Science Research (GSR) published thisisyourdigitallife and used the app to gather data about its users. Because GSR claimed this data was to be used for academic purposes, Facebook policies at the time allowed it to also collect limited information about friends of app users. All up, this meant that GSR collected the personal information of more than 50 million people – many more than the 270,000 people who used the app.

GSR then used the personal information to create psychometric profiles of the included individuals, apparently without their informed consent. These profiles were then allegedly passed on to Cambridge Analytica (possibly in breach of Facebook’s rules), which used the data to target, market to – and perhaps manipulate – individuals.

Was this a breach?

There’s been some debate over whether this incident can be fairly labelled a “breach”. Based on what we know, it certainly doesn’t appear that any personal information has been lost or disclosed by means of an accident or a security vulnerability, which is something many consider a necessary element of a “data breach”.

Facebook’s initial response was to hit back at claims it was a “data breach”, saying users willingly handed over their information, and the information of their friends. “Everyone involved gave their consent. People knowingly provided their information, no systems were infiltrated, and no passwords or sensitive pieces of information were stolen or hacked” it allegedly said.

Facebook has since hired a digital forensics firm to audit Cambridge Analytica and has stated that if the data still exists, it would be a “grave violation of Facebook’s policies and an unacceptable violation of trust and the commitments these groups made.”

In more recent days, Mark Zuckerberg has made something of a concession, apologising for the  “major breach of trust”.   We love this line from the man that told us that privacy is dead.

GDPR – would it have helped?

We at elevenM are supporters of the GDPR, arguably the most extensive and far reaching privacy reforms of the last 25 years. The GDPR raises the benchmark for businesses and government and brings us closer to one global framework for privacy.   But would the GDPR have prevented this situation from occurring? Would the individuals whose data has been caught up by Cambridge Analytica be in a better position if the GDPR applied?

Let’s imagine that GDPR is in force and it applies to the acts of all the parties in this case, and that Facebook still allowed apps to access information about friends of users (which it no longer does). Here is the lowdown:

  1. Facebook would have to inform its users in “clear and plain” language that their personal information (aka personal data under GDPR) could (among other things) be shared with third party apps used by their friends.
  2. Because the personal data may have been used to reveal political opinions, users would likely also need to provide consent. The notification and consent would have to be written in “clear and plain” language, and consent would have to be “freely given” via a “clear affirmative act” – implied consent or pre-ticked boxes would not be acceptable.
  3. The same requirements relating to notification and consent would apply to GSR and Cambridge Analytica when they collected and processed the data.
  4. Individuals would also have the right to withdraw their consent at any time, and to request that their personal data be erased (under the new “right to be forgotten”). If GSR or Cambridge Analytics were unable to find another lawful justification for collecting and processing the data (and it’s difficult to imagine what that justification could be), they would be required to comply with those requests.
  5. If Facebook, GSR or Cambridge Analytica were found to be in breach of the above requirements (although again, this is purely hypothetical because GDPR is not in force at the time of writing), they could each face fines up to 20 million EUR, or 4% of worldwide annual turnover (revenue), whichever is higher. Those figures represent the maximum penalty and would only be applied in the most extreme cases – but they make clear that GDPR is no toothless tiger.

So, there it is.  We think that GDPR would have made it far more likely that EU residents were made aware of what was happening with their personal data and would have given them effective control over it.

Some lessons

With so many recent data incidents resulting from outsourcing and supply chain, regulators around the world are focussing increasingly on supplier risk.  Just last week here in Australia, we saw the financial services regulator APRA’s new cyber security regulation littered with references to supplier risk.   The Cambridge Analytica situation is another reminder that we are only as strong as our weakest link.  The reputations of our businesses and the government departments for whom we work will often hinge on the control environments of third parties.  Therefore, organisations need to clearly assess third party risks and take commensurate steps to assure themselves that the risks and controls are reasonable and appropriate.

As for individuals – regardless of what regulatory action is taken in Australia and abroad, there are simple steps that we all can and should be taking.  This episode should prompt people to think again about the types of personal information they share online, and who they share it with. Reviewing your Facebook apps is a good start – you might be surprised by some of the apps you’ve granted access to, and how many of them you’d totally forgotten about (Candy Crush was so 2015).

What’s next

We expect this issue to receive more attention in the coming weeks and months.

Regulators around the world (including the Australian Privacy Commissioner, the UK Information Commissioner (ICO), the Canadian Privacy Commissioner and the EU Parliament) are looking into these issues now. Just over the weekend we saw images of ICO personnel allegedly raiding the premises of Cambridge Analytica, Law & Order style.

The Australian Competition and Consumer Commission (ACCC) also has been preparing to conduct a “Digital Platforms Inquiry” which, among other things, may consider “the extent to which consumers are aware of the amount of data they provide to digital platforms, the value of the data provided, and how that data is used…”

Meanwhile, we await the consumer backlash.  Consumers will likely expect increasingly higher standards from the organisations they share their data with and will seek out those organisations that are transparent and trustworthy, and which can demonstrate good governance over privacy and data protection practices.   Will you be one of them?


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Head to Head: the GDPR and the Australian Privacy Principles – Part 2: A Tale of Two Jurisdictions

This article was originally published in issue #81 (5 December 2017) of Privacy Unbound, the journal of the International Association of Privacy Professionals, Australia-New Zealand (iappANZ).

In Part 1 of this article our aim was to help you understand whether the GDPR applies to your business. In Part 2 we will help you focus your efforts in preparing for the GDPR by identifying links and differences between the 13 Australian Privacy Principles and the GDPR’s 99 Articles.

Gap analysis – Comparing the GDPR and Australian Privacy Principles

If the GDPR is likely to apply to your data processing, understanding the gaps in your current privacy framework will be critical. A gap analysis can help you identify the key areas to focus on.

The GDPR shares some thematic similarities with Australia’s national privacy regulatory regime, set out in the Privacy Act 1988 (Cth) and the Australian Privacy Principles (APPs).

The GDPR and the Privacy Act share a similar purpose – to foster transparent information handling practices and business accountability in relation to the handling of personal information. The two regimes take different approaches – the GDPR’s 99 articles are highly prescriptive, whereas the Privacy Act relies on a principles-based approach supplemented by extensive guidance.

However, the founding principles of the GDPR (the lawful, transparent and fair processing of personal data) laid out in Chapter III (Articles 5-11) and many of the GPDR’s express obligations align with the steps that the OAIC expects Australian companies to take to comply with the APPs (as set out in OAIC guidance). In short, best practice compliance with the APPs will help Australian companies support compliance with the GDPR.

There are some key differences – both in terms of legal concepts and additional data subject rights and corresponding obligations found in the GDPR. These are set out in the comparison table below.

Summary of the APPs vs the GPDR

The Australian Privacy Act applies to ‘APP entities’ – that is Australian and Norfolk Island government agencies (agencies) and private sector businesses (organisations) as well as credit providers and credit reporting bodies. Individuals and many ‘small business operators’ – businesses with an annual turnover of less than AUD $3 million – are exempt from the operation of the Act.

Unlike the GDPR, the Privacy Act does not distinguish between ‘data controllers’ and ‘data processors’ – any APP entity that holds personal information must comply with the APPs.

APP 1 — Open and transparent management of personal information

This first APP requires APP entities to manage personal information in an “open and transparent way”, including taking reasonable steps to ensure that they comply with the APPs.

APP 1 is similar in effect to GDPR Article 5 Principle 2, which requires controllers to be able to demonstrate compliance with the obligations set out in Principle 1. Principle 1(a) also requires data processing to be done in a “transparent manner”.

APP 1.3 and 1.4 also require APP entities to have a clearly expressed privacy policy that deals with specified matters. GDPR Article 7 discusses obtaining of consent from an individual in the context of a “written declaration”, and Articles 12-14 address similar matters to those specified in APP 1.3 and 1.4. GDPR Articles 13 – 14 also require additional information to be provided; this includes information about how long personal data will be stored, the enhanced personal rights under the GDPR (such as data portability, the right to withdraw consent, and the right to be forgotten), and any automated decision-making including profiling.

APP 2 — Anonymity and pseudonymity

APP 2 requires APP entities to give individuals the option of not identifying themselves, or of using a pseudonym, unless a listed exception applies.

There is no direct analogue to this provision in the GDPR. However, the GDPR may apply to pseudonymous information (see Recital 28).

APP 3 — Collection of solicited personal information

APP 3 outlines what personal information an APP entity can collect. In particular, this APP requires that organisations only collect personal information that is reasonably necessary or directly related to their functions or activities, by “lawful and fair means” and, where reasonable and practicable, directly from the individual. Higher standards are applied to the collection of ‘sensitive information’ (see comparison table below); specifically, sensitive information may only be collected with consent, or where a listed exception applies.

A comparison can be drawn here to GDPR Article 5, which requires data collected for “specified, explicit and legitimate purposes”, and be processed “lawfully [and] fairly” (Principle 1(a) and (b)). The question of whether a company has a lawful basis for processing personal information is critical.

APP 4 — Dealing with unsolicited personal information

APP 4 requires APP entities to destroy or de-identify unsolicited personal information that they could not have otherwise collected under APP 3.

There is no direct analogue in the GDPR, however it should be noted that the GDPR does not permit collection of personal data without a specified, explicit purpose.

APP 5 — Notification of the collection of personal information

APP 5 requires APP entities to notify individuals (or otherwise ensure that they are aware) of specified matters when they collect their personal information (for example, by providing individuals with a collection statement).

Again, GDPR Articles 12, 13 and 14 impose requirements for the provision of privacy information about how data is processed that are substantially similar to the matters specified in APP 5, as well as additional obligations (see APP 1, above). This includes a requirement that the information is clear and easy to understand. Australian companies should consider, for example, whether their privacy policies are written in plain English.

APP 6 — Use or disclosure of personal information

This APP outlines the circumstances in which an APP entity may use or disclose personal information that it holds. Where an APP entity has collected personal information for a specific purpose, and wishes to use it for a secondary purpose, APP 6 provides that entities may not do so unless the individual has consented, it is within their reasonable expectations, or another listed exception applies. Exceptions include circumstances involving health and safety and law enforcement.

GDPR Article 6 similarly requires that personal data may only be processed where the data subject has consented to one or more of the specific purposes of the processing, or the processing is otherwise lawful as another listed scenario applies. For example, where the processing is necessary to perform a contract or comply with a legal obligation.

APP 7 — Direct marketing

APP 7 provides that an organisation that is an APP entity may only use or disclose personal information for direct marketing purposes if certain conditions are met. In particular, direct marketing messages must include a clear and simple way to opt out of receiving future messages, and must not be sent to individuals who have already opted out. Sensitive information about an individual may only be used for direct marketing with consent of the individual.

GDPR Article 21 provides individuals with, amongst other things, the right to object to the use of their personal data for direct marketing.

APP 8 — Cross-border disclosure of personal information

This principle requires an APP entity, before it discloses personal information to and overseas recipient, to take reasonable steps to ensure that the recipient does not breach the APPs in relation to that information. Personal information may only be disclosed where the recipient is subject to a regulatory regime that is substantially similar to the APPs, where the individual has consented, or another listed exception applies. APP entities may be liable for the acts and practices of overseas recipients in certain circumstances (s16).

Chapter 5 of the GDPR provides that transfers of personal data outside of EU jurisdiction may only be made where the recipient jurisdiction has been assessed as ‘adequate’ in terms of data protection, where sufficient safeguards (such as a binding contract or corporate rules) have been put in place, or a listed exception applies. The European Commission has not, to date, assessed Australia as ‘adequate’, but the Commission is currently reviewing its adequacy assessments.

APP 9 — Adoption, use or disclosure of government related identifiers

APP 9 provides that an organisation that is an APP entity may not adopt a government related identifier of an individual as its own identifier, or use or disclose such an identifier, unless a listed exception applies. There is no direct analogue to this provision in the GDPR.

APP 10 — Quality of personal information

APP 10 requires APP entities to take reasonable steps to ensure the personal information it collects, uses or discloses is accurate, up to date and complete.

Accuracy and currency of the information are mentioned in GDPR Article 5 o(Principle 1(d); “every reasonable step must be taken” to ensure that inaccurate personal data is “rectified without delay”.

APP 11 — Security of personal information

This APP requires APP entities to take reasonable steps to protect personal information they hold from misuse, interference and loss, and from unauthorised access, modification or disclosure. This provision is a frequent focus of investigations in to APP entities conducted by the Australian Information Commissioner.

GDPR Article 5 similarly requires that data processing be undertaken in a manner “that ensures appropriate security of the data” (Principle 1(f)). Further, Article 32 requires the data controller and the processor to implement appropriate technical and organisational measures to ensure a level of security appropriate (taking into account the state of the art, the costs of implementation and the nature, scope, context and purposes). Those measures must also address the confidentiality, integrity and availability of the data.

APP 11.2 provides that APP entities must also take reason steps to destroy or de-identify personal information that they no longer require for a lawful business purpose.

GDPR Article 5 imposes a similar storage limitation – personal data may “kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the personal data are processed” (Principle 1(e)). However, the GDPR also explains that “personal data may be stored for longer periods insofar as the personal data will be processed solely for archiving purposes in the public interest, scientific or historical research purposes or statistical purposes in accordance with Article 89(1)”.

APP 12 — Access to personal information

APP 12 requires APP entities to give an individual access to the personal information about them that the entity holds, on request by that individual. APP 12 imposes procedural requirements around access, and includes limited exceptions.

Article 15 of the GDPR imposes a similar right of access, with additional rights to know information about the collection and envisaged use of the data (such as recipients or potential recipients, likely storage period, and safeguards for overseas transfers)

APP 13 — Correction of personal information

APP 13 requires APP entities to take reasonable steps to correct personal information they hold about an individual, on request by the individual. This APP also imposes procedural requirements and includes limited exceptions.

GDPR Article 16 imposes a similar but stronger right; data subjects have the absolute “right to obtain…without undue delay the rectification of inaccurate personal data concerning [them]”.

GDPR rights that are not in the APPs

What none of the APPs provide is an express right to erasure, the right of restriction of processing, data portability and the right to object. The GDPR provides for these rights in Articles 17, 18 ,20 and 21.

Complimentary APP v GDPR legal concepts comparison table

Complimentary Legal Comparison Table


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Head to Head: the GDPR and the Australian Privacy Principles – Part 1: The long arm of the law

This article was originally published in issue #81 (5 December 2017) of Privacy Unbound, the journal of the International Association of Privacy Professionals, Australia-New Zealand (iappANZ).

Introduction

The EU’s new and wide-ranging General Data Protection Regulation (GDPR) represents an unprecedented shakeup of the European data protection regulatory environment. The GDPR promises to set a new regulatory benchmark and drive reform in jurisdictions around the world. The GDPR will come into force on 25 May 2018, replacing the current EU Data Protection Directive 95/46/EC. It will have immediate direct effect in all EU Member States.

Australian companies with exposure to the European market should take note – the GDPR can and will apply to companies based outside of Europe. Australian-based companies should take this opportunity to confirm whether the GDPR will apply to them come May, or whether they need to prepare for GPDR compliance to access the European market in the future.

The costs of non-compliance may be extreme – the GDPR introduces a new set of sharp teeth for European regulators, including fines of up to €20 million or 4% of global revenue, whichever is the greater. However, the added burden of compliance promises to pose a challenge for many businesses working with limited resources.

Part 1 of this article will help you understand whether the GDPR will apply to your business. Part 2, will help you focus your efforts in preparing for the GDPR by identifying links and differences between the 13 Australian Privacy Principles and the GDPR’s 99 Articles.

The GDPR’s extra-territorial application

Critically for Australian companies, Article 3 of the GDPR extends the GDPR to any company that controls or processes the personal information of individuals in the EU (whatever their nationality or place of residence) if the processing is related to offering goods or services or monitoring their behaviour, whether or not the company is located in the EU or the processing occurs in the EU.

For the purposes of the GDPR, a data ‘controller’ determines the purposes and means of the personal information, and the ‘processor’ processes the information on their behalf. ‘Processing’ is not a term found in Australian privacy law. The term is broadly defined and essentially means any act or practice that is done to, or in connection with, personal information.

Therefore, Australian companies that service or supply European clients, or otherwise offer goods or services to or monitor the behaviour of individuals in the EU that takes place in the EU, need to assess their client and individual customer bases, operations, systems and processes to answer three key questions:

  1. Do you have an ‘establishment’ in the EU? (Article 3.1)
  2. Do you offer good or services to individuals who are in the EU (whether or not you charge for them) ? (Article 3.2(a))
  3. Do you monitor any behaviour of individuals in the EU? (Article 3.2(b)

Establishment

Article 4 provides that the main establishment of a data controller is the “place of its central administration” in the EU. That is, where the “decisions on the purposes and means of the processing” occur. For example, if you have an EU office or headquarters.

For processors, the main establishment will be either the place of central administration in the EU or, if the processor does not have one, then where the main processing activity in the EU takes place. For example, if you have your head office in Australia, but maintain an EU data centre.

Offering goods and services

The GDPR recitals explain that a range of factors will be relevant to deciding whether a company is ‘offering goods or services’ to individuals in the EU. These include:

  • the use of language and currency or a top-level domain name of an EU Member State
  • delivery of physical goods to a Member State
  • making references to individuals in a Member State to promote the goods and services, or
  • targeting advertising at individuals in a Member State.

Mere accessibility of an Australian company’s website or app to individuals in the EU will not, by itself, reach the threshold.

Some of these factors obviously indicate that goods and services are being offered. But it may ultimately be the cumulative effect of various activities that bring a company’s data processing within the reach of the GDPR.

Monitoring

To determine whether a processing activity can be considered to be ‘monitoring’ the behaviour of individuals in the EU for the purposes of Article 3.2(b), you should consider whether your company is:

  • associating individuals in the EU with online identifiers provided by their devices, applications, tools and protocols, such as IP addresses and cookie identifiers
  • tracking their behaviour on the Internet, and
  • using data processing techniques that profile individuals, particularly in order to make decisions concerning them for analysing or predicting their personal preferences, behaviours and attitudes.

Enforcement

European data protection authorities will have increased supervisory powers under the GDPR. However, the question of how those authorities will approach extraterritorial enforcement against companies established and operating outside the EU is far from settled.

GDPR Article 50 imposes obligations on the EU Commission and authorities to take appropriate steps to cooperate with international stakeholders. In recent years, there has been increasing cooperation between authorities. Under the GDPR, it is likely that EU authorities will liaise with the Australian privacy regulator – the Office of the Australian Information Commissioner (OAIC) – when responding to data processing by an Australian company. This may in turn trigger regulatory action by the OAIC or a cooperative effort to effect an appropriate response. Any evidence of a company’s presence in or nexus with an EU Member State may influence the potential for cross-border enforcement action.

How can you prepare?

If any of your answer to the three questions above is ‘yes’, then you will need to consider:

  • what are the risks from gaps in your current compliance under Australian privacy law against the GDPR requirements, and
  • what additional steps you need to take to ensure that you can comply with additional GDPR requirements, or
  • whether you need to cease any activities in relation to individuals in the EU to which the GDPR will apply and/or restructure your EU operations

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Comparing Australia’s Privacy Act with the GDPR

In this series by iapp, they look at laws from across the globe and matches them up against the EU General Data Protection Regulation. The aim being to help you avoid duplication as you move toward GDPR compliance.

In this instalment, our very own Tim de Sousa compares Australia’s Privacy Act 1988 with the GDPR.

Read the full article here: https://iapp.org/news/a/gdpr-matchup-australias-privacy-act-1988/


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