Do high regulations penalises innovation?

The most complex challenge every Individual, Corporate entity, government facing in the 21st century is cybersecurity. This trend is invariably going to continue in the coming future. To make this redundant and to fight the blitz of cyberattacks and enhance the security arena for an efficient business environment, governments all over the world, introducing strict Data protection regulations. It is indeed a humongous task to constitute an effective policy framework to make data protection, especially personal data protection safe and secure through upholding the fundamental right to privacy. Nonetheless in this scenario of fast-paced growth in innovation and technology all over the globe, it is certainly an uneasy task to regulate information technology and Digital communication. Every data regulation framework should emphasise data protection without hindering the space for innovations. So, this article discusses how some popular Data Protection regulation frameworks engage with innovation and technology advancements.

1. EU's GDPR:

EU’s GDPR compliance entails better organisational management of data and disclosure of information, efficient management of data processing and collection. Data protection by design has been a legal obligation since the GDPR came into effect in 2018. It means selecting, deploying, configuring and maintaining the appropriate technological measures and techniques to implement data protection within the formation of design. Accordingly, getting compliance with EU’s GDPR requires engagement with rules, greater staff management, the introduction of data protection offices, improved data protection management. With these, some entities may feel the pressure of regulations thus leading to low innovations. Some common perceptions among the corporate entities are 
  • Compliances leads to high costs 
  • Raising entry barriers reducing competition and incentives for innovation
Effects on innovation are highly sensitive to the characteristics of regulations. EU’S GDPR through its privacy by design has encouraged the companies to take a proactive approach rather than a reactive approach to deal with the cyber and digital vulnerabilities. Moreover, creating a kind of digital trust among the consumers or business partners. Digital trust includes transparency and accountability in itself which generates a grand reputation for the firm’s getting compliance with the data protection regulations. Facilitation of privacy by design, impact assessments, internal audit mechanism has created a positive effect on the organisation’s internal structure. According to research, Regulation driven innovations are as successful in the market as other innovations.

2. India's Data Protection Bill:

Indian Data Protection Bill which is yet to become law has explicitly given the subjective scope to innovation. It emphasises creating a “Sand-Box” which includes the organisations or Data Fiduciaries who deal with Artificial intelligence or any other emerging technologies. Such Data Fiduciaries who shall have a Privacy by Design Policy certified by the Authority will be eligible to SANDBOX for twelve months and renewed no more than two times. Furthermore, the regulation mentioned segregating the data fiduciaries who deal with a certain high volume of data as “significant data fiduciaries”.

3. UAE's Personal Data Protection Bill:

UAE which is generally attributed as a hub of innovation has recently introduced its Personal Data Protection Bill, 2022 through the federal decree by the government of Dubai. Although, subjectively most of the data protection regulations of UAE are a replication of the EU’s GDPR, UAE’s personal data protection landscape is in some sense differentiates itself from GDPR like the exclusion of government data and government authorised data from the ambit of the law. Also, unlike GDPR, UAE has precedent regulations on data privacy in some sectors like health, judicial, banking and finance. Especially Free zones in cities like Dubai which hosts several offices for large MNCs and evolving start-ups don’t come under the latest regulations. Thus, giving the exclusive scope for Innovation.
To Conclude, In practice regulations provides additional incentives for innovations leading to the creation of new technologies, products and markets, and the discovery of overlooked efficiencies. Additionally, regulations safeguards crucial assets like Data, Intellectual property rights etc and mitigates cyber threats. Tight regulations lead to great trust in the Digital economy.