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On Nov. 23, 2018, the European Data Protection Board released draft Guidelines 3/2018 on the Territorial Scope of the GDPR (Article 3) (draft Guidelines) in an effort to address concerns and open questions about the GDPR’s territorial scope. The public consultation period on the draft Guidelines ended on Jan. 18, 2019, and the public awaits issuance of the final version. The draft Guidelines seek to clarify questions raised since the passage of the GDPR over the GDPR’s extra-territorial reach, and they confirm that the GDPR’s intended reach is well beyond the geographic confines of the European Union (EU). In light of the important clarifications provided in the draft Guidelines, and assuming the final version hues closely to the draft, U.S. businesses that previously assessed that they are not subject to the GDPR may need to revisit that conclusion prior to the issuance of the final Guidelines, particularly given that noncompliance under the GDPR sanctions regime can come at a steep price.

Pursuant to Article 3, the GDPR applies if personal data is processed by (1) an “establishment” in the EU or (2) a controller or processor not established in the EU that “targets” or “monitors” data subjects in the EU. Many companies have expressed confusion about what it means to have an “establishment” in the EU. For instance, are companies subject to the GDPR solely because they use an EU processor? Similarly, are companies without an EU presence subject to the GDPR simply because they have EU customers or clients? What qualifies as “monitoring” subjects in the EU? The draft Guidelines attempted to address many of these open questions.

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