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This article was first published on FD. in the Netherlands on 14th August 2020. The below is a translation of the original content.
The case against wrongful use of personal data is getting a new Dutch front. An international claims foundation of privacy experts, supported by various interest groups, has filed an official class-action suit against the American listed companies, Salesforce and Oracle, for misusing the personal data of millions of Dutch people.
The foundation, The Privacy Collective, announced its claim on Friday. According to the foundation’s lawyer, Christiaan Alberdingk Thijm, it is the first collective claim for privacy violations based on the latest legislation that was introduced earlier this year.
The act in taking this to court in The Netherlands is striking because so far, privacy violations have yet to be addressed by European authorities. Under normal circumstances, they advise compliance leveraging the General Data Protection Regulation (GDPR). However, in the Netherlands, the Dutch Data Protection Authority cannot get a grip on large tech companies and their unbridled data trade, due to understaffing and a limited budget. Since May 2018, when GDPR came into effect, only five companies and organisations have been fined more than €3 million, including the taxi app Uber.
European legislation also leaves room for groups of citizens to go to court themselves, but that has hardly happened until now. Yet, last year the Consumers’ Association decided to start an action against Facebook, which has attracted nearly 170,000 people so far.
The foundation consciously chose two lesser-known parties in the technology market. Obvious names such as Facebook and Google are already under fire from various authorities and private individuals. “But these large, listed tech groups are also very active in the data trade,” says Alberdingk Thijm.
The Privacy Collective can start a lawsuit due to new Dutch legislation, without having to recruit members to pay for the court proceedings beforehand. The Netherlands deviates from many other countries, where submitting mass claims is very laborious.
The claim focuses on the collection, bundling, enrichment and sale of digital profiles of Dutch internet users, without their consent.
Billions of damages
The claim focuses on the collection, bundling, enrichment and sale of digital profiles of Dutch internet users without their consent. Salesforce, seller of cloud software for relationship management, and software supplier, Oracle, have strengthened their position in the online advertising market in recent years. Four years ago, Salesforce acquired Krux data management platform for $700 million. Customer data such as email addresses and purchase history is enriched with other data sources, from dog ownership, to zip code and income. In addition, even more personal data is collected by placing ‘cookies’ on websites that track internet users whilst they are on the web.
Alberdink Thijm estimates the possible claim to billions of euros. He bases this on a compensation that was awarded in the Netherlands earlier this year by the Council of State. He granted a claim of 500 euros from a patient at the Pieter Baan Center, after his data had been shared by this clinic with other parties in the context of a disciplinary complaint.
Because, according to the lawyer, there are at least 10 million Dutch internet users, the tech companies have the potential to compensate €5 billion each in immaterial damage.
Before that happens, it must first be clear to the court whether there has been a violation of the privacy rules, the GDPR. The foundation filed a 200-page action on Friday 14 August.
British litigation funder
The funding comes from Innsworth, a British lender specialised in advancing these types of proceedings. Innsworth is owned by the well-known American hedge fund, Elliott. This is widely known in the Netherlands as an activist shareholder of Akzo Nobel and more recently Nationale Nederlanden, among others.
The financier advances the costs of the proceedings, in exchange for part of the proceeds from any distribution that the lawsuit may generate. In this case, Innsworth will charge thirty percent of any proceeds, the maximum possible in the Netherlands on the basis of the code of conduct that has been drawn upon the submission of mass claims.
Innsworth has pledged €1.5 million for the first phase of the procedure, including for the attorney’s fees and the establishment of the mandatory foundation. “A budget that a supervisor is jealous of”, says Alberdingk Thijm.