I’m amazed by the number of businesses that don’t understand we have entered an era of data sovereignty. It’s a pretty challenging word to spell, especially in a global business like e-commerce is. But the sooner that early stage entrepreneurs understand it, the better they will be able to sleep at night.
Turkey recently passed a law requiring companies to maintain Turkish citizen data within the country. I don’t read Turkish (yet), but PayPal was forced out of Turkey because they couldn’t comply with the new rules. What? PayPal couldn’t comply?? You bet’cha!
This is not a unique data sovereignty issue. Several years ago, Brazil changed their own rules to require that the only way a company can accept a payment in Brazilian Reals is to have a local payment contract. Harmless enough, right? Except that the only way to get that local payment contract is to have a… wait for it… local Brazilian entity. Ugh.
So what’s going on here? Well, from my perspective, a few things:
- American hegemony — Countries are trying to fight back from all the big American companies dominating on local companies. Google. Facebook. Amazon. Twitter.
- Edward Snowden — The fact that this digital data is available to cross-borders quite easily and we now know that at least the US government is capturing and reading this information gives foreign governments an opening to “protect” their citizens.
- Benjamins — Hat tip to Puff Daddy, but tax revenue leaving your country and going somewhere else is a drain on a country’s coffers and governments are trying to create artificial barriers to create local jobs and keep money in the country.
For any digital product manufacturer or online service seller, it’s costly to be in compliance with the many laws around the world. How many lawyers and accountants and compliance managers do you need to comply globally? Don’t let the Age of Data Sovereignty turn into the Twilight Zone.