Data security and data privacy are terms that often appear in the same sentence. Although some of the means of securing both are identical, there are also critical distinctions between them that mustn't be overlooked when considering service providers.

By John Ghrist

We've likely all heard for many years now about how globalized the world is becoming. In the Internet Age, many points on the planet now communicate and share information instantaneously, and the practice of direct buying and selling of goods across borders has gone from an almost exotic happenstance to a commonplace goal of a majority of U.S. business enterprises in the last two decades. Hand in hand with that has been the need to secure data needed to handle business transactions: customer contact information, credit card and bank account numbers, and routing information are obvious examples. Everyone agrees such things must be kept securely confidential. Yes, we've seen this movie before.

Unfortunately, what's not so obvious is a situation that could soon become a critical stumbling block for international commerce, and is already an important but sometimes forgotten factor in cloud computing: Not every nation in the world defines "data privacy" the same way.

Although there is general agreement across the world that medical information must be kept private, there are some wide variances in other data categories. For example, in the U.S., the primary concerns are with confidentiality of Personally Identifiable Information (PII), generally meaning information that can be traced to a specific individual (e.g., name, address, date of birth, social security number, phone number, email address, passwords, and the abovementioned financial tracking info).

The Mouse That Roared

In the European Union, however, the General Data Protection Regulation (GDPR) (further strengthened effective in 2018) defines personal data as "any" information "relating to an identified or identifiable natural person (data subject)." That definition actually can include such factoids as a person's job, social/cultural/economic identity info, trade union membership, genetic or descriptive information such as hair color, and behavioral information that could be obtained via computer, such as IP addresses, browser viewing habits via cookies, biometric information, or use of unique hardware identifiers like RFID tags. It could even include data like political opinions or past participation in political protests. (Considering there are a few democratic republics flirting with authoritarianism these days, how problematic might that become in the next few years? Does Meta—the former Facebook—keep political opinions private? Not so much, you've maybe heard.) So yes, Virginia, even pastoral Lichtenstein follows more rigorous data privacy rules than the USA does.

This difference has implications, for which Meta itself is a showcase example. Because the U.S. protections aren't as stringent as the EU's, an accommodation called the U.S.-EU Safe Harbor Agreement was cobbled together back in 2000 to allow European countries to share data with entities in the U.S. even though U.S. data privacy practices are in blatant violation of the EU's GDPR and thus "normally" wouldn't be able to do that. Instead, individual data import and export companies sign agreements with each other (called Standard Contractual Clauses, or SCCs) that say, "Okay, we agree to share data even though it's technically illegal under the GDPR." It's on that basis that cloud service providers (CSPs) on the two continents are able to store data on server farms located geographically in each other's countries, for example as a hedge against losing data in the event of some catastrophic disaster (although there are other reasons as well).

However, in a legal case called Max Schrems vs. Data Commissioner, which started when Meta moved some of the Irish gentleman Mr. Schrems' Facebook information to the U.S. for processing on Facebook servers and Schrems objected to the Irish Data Commissioner. That's because, thanks to the USA Patriot Act and other U.S. legal rulings, the U.S. government is allowed to demand personal information stored in the U.S. any time it thinks it should for national security reasons, and Schrems didn't like it. The Irish Data Commissioner agreed with Schrems and ruled that not only the U.S.-EU Safe Harbor Agreement, but SCCs as well were illegal under EU law. In response, The U.S. and EU came up with a U.S.-EU Safe Harbor Framework, which was approved by the European Commission in 2016. The Framework countered the idea that SCCs were invalid and those were allowed to continue when in July 2020 the Court of Justice of the European Union (CJEU) split the baby in a case called Schrems II (filed to clarify the status of SCCs) when it agreed with the Irish commissioner and struck down the original U.S.-EU Safe Harbor Agreement while leaving SCCs and the Safe Harbor Framework in place.

However, SCCs are now subject to being invalidated if they don't conform to guidance issued by individual European governments, which will have to be done on a case-by-case basis, according to the CJEU's ruling. While many objections raised by the Schrems cases (e.g., legal remedies and appeals for individuals) can be resolved in the wording of SCCs, there's still the sticking point of mandatory national security and surveillance laws that overrule any language in SCC agreements.

Although the U.S. and Switzerland have come to a Privacy Shield Agreement that the European Commission has also signed off on that takes the place of Safe Harbor, we'll all need to keep an eye on what goes on there. The case-by-case exception leaves a thread that, pulled the right way, could potentially unravel any SCC or the Safe Harbor Framework and undermine data exchanges between U.S. and EU countries—pretty much at any time in the future.

Private Benjamins

The Schrems situation doesn't even get into other existing U.S.-EU differences, such as the widespread and largely winked-at practice of selling non-PII U.S. consumer information between corporate enterprises. That's flat out illegal over there, but in the land of rampant consumerism, very little is permitted to stand in the way of selling anything anyone conceivably might be lured into buying. In the U.S., all non-PII information about you seemingly belongs to everyone except you.

Such antics, largely viewed as consumer exploitation abroad, as well as Schrems and the controversy over the fate of Edward Snowden (despite the illegality of his actions) have spurred numerous other countries to pass Internet-related privacy laws since 2015. Brazil's Marco Civil Da Internet, Russia's Localization Act, Australia's Australian Privacy Principles, the Japan Act on the Protection of Personal Information, Canada's Personal Protection Information and Electronic Documents Act, and Germany's Bundesdatenschutzgesetz (Federal Data Protection Act) are just a few prominent examples of how few privacy protections U.S. residents have compared to some other countries. The rest of the world is getting wise to the privacy problem, even if the U.S. isn't. If European SCCs come unraveled, CSPs will have few non-U.S. places to go to store cloud data without running into more potential legal roadblocks. Many IT professionals remain blind to this situation because data security and data privacy are so often thought of as a single concept here in the U.S., and notions of a right to privacy are fended off with the "if you're not doing something wrong, why do you want to hide anything?" argument.

This is not to say that privacy somehow overrules security. There are numerous problems of that kind that good CSPs can mitigate. Common concerns include preventing unauthorized access to the data, preventing carelessness on the part of authorized users (such as unauthorized use of USBs to download data for supposed use elsewhere), data theft facilitated by multiple tenancy of CSP customers on the same servers, and carefully watching any hypervisor in charge of more than one virtual machine for signs of irregularities.

Obviously, enterprises that are using private clouds don't have to worry about this conundrum. Their data access and storage remains under their control. But for a wide range of reasons, not every enterprise can afford or easily conform their businesses to a private cloud, and have to use a hybrid or public cloud arrangement. Those are the circumstances in which data-privacy vulnerabilities are most acute. If you're one of those, how do you protect yourself and your organization?

Rise of the Guardians

Whether you're contemplating signing up with a CSP or already have, find out where your data's being physically stored and what the CSP's stance is on SCCs if European storage is part of their plan. Don't let them dissuade you by claiming it's a trade secret, either.

Insist on top-notch security protections, such as two-factor authentication of users, strong passwords, and the requirement that your data be encrypted at rest, in transit, and in backup via the Advanced Encryption Standard.

Set up Service Level Agreements that are transparent about data location, methods of transfer, data redundancy, and constant testing of systems.

Make the IT department responsible for stringent oversight of CSP activities and practices. Assign someone in your organization to learn how the CSP monitors the security of your enterprise's data and the physical security of their servers.

Demand written copies of CSP procedures, change-control processes, and security plans. Treat lack of written plans as a red flag.

Insist on similar transparency if the CSP is subcontracting any part of its services to another organization.

Determine up front what happens to obsolete data. It should be safely disposed of as soon as the law requires or when it's fulfilled its purpose.

Strongly consider using DevSecOps processes.

Make your employees aware of security procedures and protocols and the need for following them religiously.

Find out what your CSP's policies are when they are asked for data by a government agency.

Be sure that data-collection software and devices are doing so for valid reasons and that those from whom it is collected have provided consent for that to occur.

Check that your CSP is actively notifying you prior to collecting, transferring, or sharing personal data.

Use cloud logging in real time and assign someone to review those logs for irregularities.

Understand what the International Privacy Principles are.

Lobby your legislators about the need for more privacy protections for data and computer system users.

John Ghrist

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John Ghrist has been a journalist, programmer, and systems manager in the computer industry since 1982. He has covered the market for IBM i servers and their predecessor platforms for more than a quarter century and has attended more than 25 COMMON conferences. A former editor-in-chief with Defense Computing and a senior editor with SystemiNEWS, John has written and edited hundreds of articles and blogs for more than a dozen print and electronic publications. You can reach him at ghrist@comcast.net.