Factors Driving Data Localization

Goals

To determine 4-6 factors that are driving the adoption of data localization and data sovereignty globally, with details on what each factor is, and its impact on the data market.

Early Findings

  • India has had some data localization laws in place since 2007. However, the push to stronger localization sped up in 2018.
  • A report published by the International Comparitive Legal Guides (ICLG) stated four factors driving data localization in India: securing individual rights; national security and law enforcement; widening tax base; and economic protectionism.
  • The Brookings Institute published a report on the importance of cross-border data flows, and in the report they identified several reasons that governments cite for instituting data localization laws. These include protecting personal privacy, allowing for easy access to data by law enforcement, protecting national security, improving economic competitiveness, and leveling the regulatory playing field.

Protecting National Security

  • Some governments are claiming that allowing data to leave the country makes it difficult, if not impossible, for local law enforcement to to access data for investigations.
  • There were several times recently that India struggled to access data that was stored overseas.
  • Rather than implementing stricter data laws which impact businesses globally, governments could look to strengthen mutual legal assistance treaties (MLATs). These are agreements between countries that allow law enforcement in one country to request data held in another country if it is relevant to an investigation.
  • One current problem with MLATs is that it can take months to obtain data. For example, obtaining data from a U.S. company typically takes 10 months. This is too long and needs to be addressed if these agreements are going to be relied on.
  • Another option would be to create bilateral or multilateral data sharing agreements.
  • Data localization may be better for governments, but it will generally result in less privacy for individuals and enterprises, as the government has more access to data.

Improving Economic Competitiveness

  • Requiring that data be maintained locally can actually provide an economic boost to local firms. This means they are not required to research guidelines in other countries.
  • One unintended consequence of data localization laws on economies is an increase in prices and more limited choices for information and communications technology products and jobs.
  • "Data-nationalism" can limit a country's ability to innovate as they are restricted by data guidelines.

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