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Examining the limits and costs of GDPR regulation

The U.S. print edition of the Financial Times [recently] published an Opinion piece by Eline Chivot, senior policy analyst for the Center of Data Innovation. The piece, titled “A reality check for GDPR: it is holding EU business back,” calls out the perhaps unintended consequences of regulation.

Of course, anyone familiar with Milton Friedman would have anticipated the conclusion of the author. It seems that triangulating several surveys, the author highlights how the impact of GDPR is slowing down innovation in the EU.

GDRP requires firms who legally use personal data have to be able to explain how their AI-based automated decisions are executed. However this is easier said than done. Explainable-AI is hard to do; have you ever looked at how a deep neural network works? As such, some survey data suggests that increasingly firms are eschewing AI-based innovation due to the increased risks that GDPR brings.

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Additional data is called out that suggests VC funding for AI/innovation in the EU in such areas is decreasing. Are the data points related? That’s the assumption of the Opinion piece. Another survey is referenced that suggests that consumer faith in the idea that they have more control of their data, a year after GDPR came into force, is declining. And a final survey suggests that majority of Europeans have never even heard of GDPR.

So what did we expect? Regulations are often causes of unintended consequences. AI is a powerful technology than can and will be applied to many areas.

So is there a way to have our cake and eat it too? I just did a book review for an interesting read that suggests that China, that enjoys a very different regulatory framework, may have an advantage in the area of AI innovation and development. It is hard to argue against such perspectives given what this Opinion piece calls out. So what is the long term implication?

Will China experience a social disruption where consumers ‘wake up’ and resist the data-use that goes in in such a centrally planned society? Will Europe try to alleviate the penalties that GDPR seems to imply? I suspect neither are likely. So perhaps the innovation trajectories are baked in?

(This post originally appeared on Andrew White's Gartner Research blog, which can be viewed here).

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