The European Union is on the verge of amending its data security law. According to Bloomberg, the proposed law regarding the use of personal data by companies such as Facebook (FB - Free Report) , Google and Microsoft (MSFT - Free Report) will be made more stringent.
One of the proposed amendments requires the social networking companies to disclose a user’s personal information, free of cost, to that particular user if the individual makes a request. Moreover, the proposed amendments will facilitate the shift of personal data from one social platform to another at the behest of the user.
Most importantly, European Union data protection agencies could levy a fine of up to 2% of the social network company’s yearly global sales on violation of the aforementioned rules.
Social networking companies such as Facebook have been placed under the scanner as regulators mull over the alleged misuse of personal data. Moreover, data security has always been in question due to the large amount of data stored by these companies.
Despite the efforts of social networking companies to secure stored data, misuse of personal records through hacking into ones profiles have resulted in identity theft, cyber stalking and screening of unwanted advertisements. Most of the time, social networking companies argue that they adhere to strict data security standards and any incident of hacking or stolen happen as a result of user ignorance.
Facebook sees the European Union’s move for stricter control over user data as a stumbling block to “a flourishing European digital single market and the reality of innovation on the Internet”. Google and Microsoft, members of The Industry Coalition for Data Protection, were also critical of the proposed changes.
Limiting the use of personal information would hurt social networking companies that require the data for better targeting of advertisements. Without effective advertisements, these platforms would be unable to generate adequate profits and would therefore lead to their extinction.
Using personal information has however been a controversial matter for a long time now. In 2011, Google paid a penalty of $131,000 levied by the French authorities for unauthorized collection of personal data for the company’s Street View mapping service. It was the heftiest penalty that was ever paid by any company to date. In another instance, Facebook was also asked to remove its facial recognition feature by the Irish authorities. Germany and Switzerland have also adopted a strict stance on the data protection and data security issue.
The proposed amendments to increase data security will be examined by EU lawmakers and EU governments, following which the amendments will be implemented.
Currently, Facebook has a Zacks Rank #2 (Buy) while Google carries a Zacks Rank #3 (Hold). Microsoft has a Zacks Rank #4 (Sell).