The EU Privacy Directive and the Resulting Safe Harbor

The rapid growth of the Internet and the importance of international business operations have thrust the issue of Internet privacy into the center of domestic and international political debates. Varying definitions of privacy have led to numerous--often inconsistent--legislative schemes to protect privacy on the Internet. These inconsistencies have made it difficult for companies to penetrate foreign markets and to maintain international operations. Of primary concern to U.S. companies is the EU Privacy Directive. The Directive requires U.S. companies that attempt to interact with potential customers or their own employees in the European Union either to qualify for a Safe Harbor or reach an individual compromise with each country from which data will be extracted. Not only do these requirements place additional costs on U.S. companies, they also place U.S. companies at a competitive disadvantage. More ominously, it appears that in the haste of the United States to implement privacy legislation, legislators are mimicking the EU Directive without considering the differences between the U.S. and EU legal systems, the historically different treatment of privacy as a fundamental right in the European Union, or shortfalls in the Directive itself