In today’s digital age, data privacy has emerged as a critical concern for governments, businesses, and individuals around the world. As the collection, processing, and storage of personal data becomes increasingly prevalent, jurisdictions worldwide are enacting laws to safeguard consumer information.[1] Among these, the European Union’s (“EU”) General Data Protection Regulation (“GDPR”) stands as one of the most influential and far-reaching. While originally designed to protect the privacy of EU citizens, GDPR has substantial implications for United States (“U.S.”) businesses, as it extends its reach to any organization processing personal data of EU residents, regardless of where the company is based.[2]
The GDPR, enacted in May 2018, introduced sweeping changes to data protection and set high standards for the handling of personal data.[3] For U.S. companies offering goods or services to EU residents or monitoring their behavior, compliance with GDPR is no longer optional.[4] As global markets become increasingly interconnected, understanding the impacts of GDPR has become a necessity for American businesses seeking to navigate the complexities of international data privacy laws.[5]
Since its introduction, GDPR has influenced not only the EU but also privacy legislation around the world, setting the tone for other countries to develop or strengthen their own data protection regulations.[6] Its comprehensive framework, which emphasizes consumer rights and the secure handling of personal data, has established a new global benchmark for privacy standards.[7] As U.S. businesses continue to engage in cross-border commerce, the importance of understanding and adhering to GDPR cannot be overstated.
U.S. companies, even those without direct business operations in any of the 28 EU member states, are still subject to the obligations of the GDPR.[8] Virtually all U.S. businesses today maintain an online presence, and any organization marketing products or services via the internet to EU consumers must carefully assess and ensure compliance with GDPR requirements.[9]
Most personal data collected by U.S. companies from EU data subjects occurs through online interactions.[10] Therefore, organizations engaging with EU users must align their data handling practices with GDPR mandates. This includes respecting the extensive rights granted to EU individuals, such as the right to access, correct, delete, and restrict the processing of their personal data.[11] To meet these obligations, U.S. companies must implement clear and efficient internal procedures to address such requests promptly. Non-compliance can lead to substantial financial penalties and serious reputational damage.[12]
Under Article 3 of the GDPR, if a company collects personal data or behavioral information from individuals located in the EU, it becomes subject to the regulation’s requirements, regardless of its physical presence in Europe.[13] Two important clarifications should be noted. First, the GDPR applies only when data subjects—individuals to whom the data pertains—are physically located within the EU at the time their data is collected.[14] Thus, the regulation does not extend to EU citizens outside the EU when their data is gathered.[15]
Second, the GDPR’s scope is not limited to transactions involving payment.[16] The mere collection of “personal data”—what is commonly referred to in the U.S. as personally identifiable information (PII)—triggers compliance requirements, even if such data is gathered through non-commercial means, such as marketing surveys.[17]
To fall under the GDPR’s scope, an organization must specifically target data subjects located within an EU member state.[18] Generic or incidental marketing is not sufficient. For instance, if a Dutch user stumbles upon an English-language webpage designed for U.S. consumers or B2B (business-to-business) clients, the GDPR would typically not apply.[19] However, if a company’s marketing is localized—such as content in the language of the EU country or direct references to EU users and customers—this would be considered targeted marketing, triggering GDPR compliance requirements.[20]
U.S. companies that have identified markets within EU countries and maintain localized web content must closely examine and adjust their online operations.[21] In particular, marketing forms and user interactions directed at EU residents must secure explicit consent before any data collection occurs.[22] Under the GDPR, such consent must be “freely given, specific, informed, and unambiguous,” and it must also be revocable at any time.[23] This is a notable departure from the implicit or opt-out consent models that are more common in the U.S.[24]
Once U.S. companies collect personal data from EU residents, they must safeguard it in accordance with GDPR requirements.[25] In the event of a data breach—such as the accidental or unlawful destruction, loss, alteration, unauthorized disclosure of, or access to personal data—organizations must assess whether the incident poses a “risk to the rights and freedoms” of the affected individuals.[26]
While GDPR allows some discretion in risk evaluation, breaches involving sensitive data—such as medical or financial information, children’s data, or a large volume of personal identifiers—typically require notification to an EU supervisory authority within seventy-two hours.[27] Where a breach presents a “high risk” to fundamental privacy rights, such as the exposure of credit card numbers or account credentials, the impacted data subjects must also be directly informed.[28]
To enforce compliance, GDPR imposes strict penalties. Failing to notify regulators within the seventy-two-hour window can result in fines of up to two percent of global annual revenue, while more serious violations may lead to penalties of up to four percent of global turnover or €20 million, whichever is higher.[29] These stringent consequences have pushed many U.S. companies to prioritize GDPR compliance.[30]
For American businesses entering the European market, GDPR adherence is not just a legal necessity but also a competitive advantage. It establishes clear standards for data consent, transparency, and user rights, helping companies reduce legal risks while building trust and credibility with EU consumers. In conclusion, aligning with the GDPR and similar data privacy frameworks not only ensures legal compliance but also provides U.S. businesses with a strategic advantage in an increasingly interconnected global market. As GDPR’s influence continues to shape data protection regulations worldwide, adopting its rigorous standards enables companies to simplify their operations and navigate international markets more effectively. By maintaining a consistent privacy strategy that meets GDPR requirements, businesses can mitigate legal risks, enhance consumer trust, and strengthen their global presence.
[1] How GDPR and Other Data Privacy Laws Impact American Businesses, McNeely Law, https://www.mcneelylaw.com/how-gdpr-and-other-data-privacy-laws-impact-american-businesses/.
[2] Jyotirmay Jena, The Impact of GDPR on U.S. Businesses: Key Considerations for Compliance, 9 Int’l J. Comput. Eng. & Tech. 309, 319 (2018), https://doi.org/10.34218/IJCET_09_06_032.
[3] An Overview of the Data Protection Act 2018, Information Commissioner’s Office, https://ico.org.uk/media/2614158/ico-introduction-to-the-data-protection-bill.pdf.
[4] Yaki Faitelson, Yes, the GDPR Will Affect Your U.S.-Based Business, Forbes (Dec. 4, 2017), https://www.forbes.com/sites/forbestechcouncil/2017/12/04/yes-the-gdpr-will-affect-your-u-s-based-business/.
[5] Id.
[6] Jennifer Wu & Martin Hayward, International Impact of the GDPR Felt Five Years On, Pinsent Masons (May 25, 2023), https://www.pinsentmasons.com/out-law/analysis/international-impact-of-the-gdpr-felt-five-years-on.
[7] Id.
[8] Faitelson, supra note 4.
[9] Id.
[10] Gina Fanning, Does GDPR Compliance Apply to U.S. Companies?, Netwrix (Mar. 27, 2020), https://blog.netwrix.com/2020/03/27/gdpr-in-the-us/.
[11] Id.
[12] European Commission, What if My Company/Organisation Fails to Comply with the Data Protection Rules?, EUR. COMM’N, https://commission.europa.eu/law/law-topic/data-protection/rules-business-and-organisations/enforcement-and-sanctions/sanctions/what-if-my-companyorganisation-fails-comply-data-protection-rules_en.
[13] General Data Protection Regulation (EU) 2016/679, art. 3, O.J. L 119 (May 4, 2016).
[14] Fanning, supra note 10.
[15] Id.
[16] Faitelson, supra note 4.
[17] Id.
[18] Id.
[19] Id.
[20] Id.
[21] Jena, supra note 2.
[22] Id.
[23] General Data Protection Regulation (EU) 2016/679, art. 4(11), O.J. L 119 (May 4, 2016).
[24] McNeely Law, supra note 1.
[25] General Data Protection Regulation (EU) 2016/679, art. 33, O.J. L 119 (May 4, 2016).
[26] Id.
[27] Id.
[28] General Data Protection Regulation (EU) 2016/679, art. 34, O.J. L 119 (May 4, 2016).
[29] Id. at art. 83.
[30] Lacy Gruen, GDPR Is Coming: Why U.S. Companies Must Start Planning for GDPR Now, Ivanti (Oct. 16, 2017), https://www.ivanti.com/blog/gdpr-coming-u-s-companies-must-start-planning-gdpr-now.
