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June 13, 2024

How regionalised data sovereignty is changing the marketing landscape

How regionalised data sovereignty is changing the marketing landscape

In 2020, amid a rapidly evolving global data landscape, TikTok, a brand deeply rooted in Chinese technology and known for its extensive collection of user data, found itself at a crossroads. Responding to the shifting dynamics, ByteDance, TikTok’s parent company, took a proactive step by running a novel full-page advertisement in the German news magazine SPIEGEL. 

This advertisement marked a departure from TikTok’s typical marketing strategies, focusing not on its content or lifestyle appeal but on its privacy measures. These measures included a restrictive privacy policy and ongoing “third-party audits” of its data use. 

This move by ByteDance was not just a marketing strategy but a clear acknowledgment of the emerging concept of the EU data space, signalling its intention to align with European standards and establish itself as a trustworthy partner in a new era of data handling. 

This strategic pivot by TikTok reflects a broader trend in which the traditional global data stack is increasingly being challenged, giving way to the concept of regional data sovereignty. This emerging paradigm champions the idea that each country or jurisdiction should have the autonomy to govern the data within its borders, enforcing stringent regulations on cross-border data exchange. 

This shift towards decentralised data sovereignty is reshaping the digital landscape, presenting opportunities and challenges for marketers and businesses alike. As we delve deeper into the implications of this change, it becomes clear that adapting to the principles of data sovereignty will require innovative approaches and strategies to navigate the complex web of regional data laws and practices.  

Recent data privacy developments that show potential regional movement 

The heavy regulation and restriction of cross-border data exchange and data use have long been standard for companies doing business in China. Recent developments, however, suggest that more regions and regulators are leaning toward regional data and privacy control. 

This follows on the heels of the Digital Services Act of 2022, an attempt to infuse the digital economy with a distinctly European understanding of data privacy. EU policymakers aim to establish a delicate balance between privacy values and the economic value of data as an essential resource. Two years prior, the Court of Justice of the European Union also decided in the Schrems II ruling to cancel all agreements between the EU and the United States regarding the global exchange of data. 

Attempts to regulate and curtail global data use have been made in countries across the world, from Singapore’s constantly evolving Personal Data Protection Act to Brazil’s General Data Protection Law. For its cloud services, a company like Microsoft already maintains a wide array of regional offerings to comply with varying local and regional regulations and requirements. 

All of the above point to a breakdown of global data hubs. 

Brands must pivot 

As the EU tightens data privacy laws and introduces the possibility of regional data sovereignty, many brands and marketers need to evolve and rethink how they approach data. This affects the development of new, data-based business models, but the challenges are even more fundamental.

Orchestrating global campaigns or developing and marketing products becomes difficult when working with two separate data systems. Businesses will have to rethink their data strategies as a whole. 

Global brand communication aimed at different regions with different data regulations will require more effort and deliberation to achieve consistent and globally coherent branding results. As technology and the customer experience become increasingly intertwined, marketers must become more tech- and data-savvy and aware of regional differences. 

This will require more work, but it’s not an unprecedented challenge: Global brands already must account for cultural differences in their global marketing strategies. The question of regional data spaces simply adds another dimension to consider. 

How market-neutral data will impact the marketing industry 

This other dimension introduces new structural requirements. If this development continues, the industry could also move away from the current data broker-based approach in favour of a more market-neutral data exchange, which could lead to some unprecedented outcomes. 

As the data infrastructure evolves, data handling will also need to change. Practices such as anonymization, encryption, and pseudonymization will remain key aspects of any new approach. 

Microsoft has become a trailblazer in this arena, mainly due to the pressure exerted by EU regulators and the risk of losing its critical position in the EU’s economy. Microsoft’s various levels of at-rest and in-transit encryption guarantee users a seamless experience plus data protection — an approach that is mostly in line with EU regulations. 

Other predictions include the concepts of data hubs and data trustees, but while such ideas might offer solutions on a B2B level, they remain largely theoretical in the consumer data space. The critical questions become: How does your brand work with data, and how do you ensure that your data governance leads to a coherent and compliant experience for everyone involved? 

The future of the internet and brand responsibility 

Regulation will continue to shape the internet and its product and technology landscape, regardless of whether it favours data trusts or complete decentralisation. Whatever happens, people will increasingly demand improved privacy and security for their sensitive data. Companies that want to stay relevant must heed this call and make ethical and secure data handling a part of their brand promise and subsequent marketing communications. 

 Christoph Bornschein – President of Digital Strategy, Business Development, and Growth for Omnicom Group in Germany – Christoph is the co-founder and chairman of TLGG, a digital transformation agency and consultancy advising brands and corporations on digital change, connected communication, and digital business innovation, which he sold to Omnicom in 2015.

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