This week, we’re continuing our focus on data privacy law—those rules that govern the collection, handling, and use of personal data.

We’ve previously covered two major areas of substance: consumer rights (powers granted to individuals to control their data) and controller obligations (rules governing the lawful behavior of businesses).

Now, we’re tackling a related, but perhaps more fundamental aspect of law: to whom do they apply?

The scope or applicability of law is as fundamental to understanding its impact as its substantive content.

Let’s dive in.

Size Thresholds

Data privacy laws vary significantly in how they apply to organizations of different sizes.

Unlike the General Data Protection Regulation (GDPR), which applies universally to any entity processing personal data of EU residents, other regulations set specific size thresholds as part of their applicability criteria. For instance, the California Privacy Rights Act (CPRA) targets businesses that either have a gross annual revenue exceeding $25 million, handle the personal information of 100,000 or more California residents, households, or devices, or earn 50% or more of their annual revenue from selling Californians’ personal data.

This tiered approach illustrates the nuanced landscape of data privacy law, where the size and economic footprint of an entity play a pivotal role in determining regulatory obligations.

Jurisdiction

Another critical factor is whether a company conducts business with a significant number of residents within a jurisdiction.

This criterion extends beyond mere physical presence or economic activity to consider the extent and nature of an entity’s interactions with individuals in a particular locale. The GDPR stands out for its broad reach, affecting companies outside the EU that offer goods or services to, or monitor the behavior of, EU residents.

This inclusive definition ensures that businesses cannot evade compliance through geographical or operational loopholes, emphasizing the importance of understanding the territorial scope of activities in relation to data privacy laws.

Related to this is the concept of “extraterritoriality.” Extraterritoriality refers to the capacity of a country’s laws to extend beyond its borders, a principle increasingly adopted in data privacy regulations. The GDPR is a prime example, applying to any organization that processes the personal data of individuals in the EU, irrespective of the organization’s location. This broad extraterritorial reach reflects the global nature of data flows and the intention of lawmakers to provide comprehensive protection for individuals’ personal data, regardless of where the processing entity is based.

Revenue

The generation of significant revenue from the sale of personal data can also bring businesses under the ambit of certain data privacy laws.

The CPRA, for example, specifically addresses entities that profit from the handling of personal information, setting a benchmark where deriving 50% or more of annual revenue from selling California residents’ personal data triggers compliance requirements.

This criterion underscores the growing scrutiny of business models that capitalize on personal information, prompting a reevaluation of practices around data monetization.

Conclusion

The above items are the most typical criterion for determining the scope of data privacy law.

By considering factors such as size thresholds, the nature of business interactions with residents, revenue derived from personal data, and the implications of extraterritoriality, organizations can better evaluate their legal obligations and implement effective data protection strategies.

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