The GDPR Takes Flight: What American Companies Need to Know

Companies are being inundated with the ever-changing landscape of data security, network security, cyber security and a host of other digital references that leave legal and compliance departments frustrated and looking for answers. This is especially true for small and medium-sized businesses or enterprises (SMEs) that operate without a litany of specialized attorneys and robust IT departments. With the General Data Protection Regulation (“GDPR” or “Regulation”) coming into force, companies are now responsible for additional compliance concerns, so what exactly do American businesses and SMEs need to know?

The GDPR came into force across the European Union in May 2018 and remains one of the most far-reaching data privacy laws ever enacted. The regulation was designed to give EU residents greater control over how companies collect, use, and manage their personal data. This control extends to data used for sales and marketing activities, as well as data processed for security and operational purposes.

Under the GDPR, individuals have clear rights to understand, limit, and influence how organizations use their personal information for commercial purposes. Prior to its adoption, many companies in the United States and other regions could collect and manipulate personal data with limited legal accountability. The GDPR fundamentally changed that dynamic by establishing enforceable rights and obligations.

Although the regulation applies directly within the EU, its impact reaches far beyond Europe. By setting higher standards for data protection and accountability, the GDPR has influenced global expectations around privacy and responsible data use. As a result, multinational companies that collect or process data from EU residents must implement legitimate compliance controls to meet regulatory requirements and avoid enforcement action.

What kind of data is protected?

The GDPR protects personal information and any data used to identify an individual, including behavioral data and other metrics commonly used for commercial purposes. Under the regulation, “personal data” includes any information that relates to an identifiable person, such as a name, government identification number, location data, online identifier, or other details connected to an individual’s physical, physiological, genetic, mental, economic, cultural, or social identity.

In addition to this broad definition, the GDPR also establishes special categories of personal data that require a higher level of protection. Although this data may not be processed as frequently, it carries greater sensitivity and risk. These special categories include information revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, as well as genetic and biometric data used for identification. They also cover data related to an individual’s health, sex life, or sexual orientation. Because of the heightened sensitivity involved, organizations must apply stricter controls and safeguards when handling this type of information.

Do American companies have to comply with the GDPR?

The short answer is yes. In general, any American company, regardless of size, must comply with the GDPR if it collects personal information from EU residents. This requirement applies whether the organization is large, mid-sized, or small, as long as it processes data connected to individuals in the European Union.

That said, some entities may qualify for limited exemptions under specific provisions of the regulation. For example, certain organizations may be exempt from maintaining records of processing activities under Article 30. However, these exemptions are narrow and apply only under defined circumstances. As a result, most businesses cannot rely on them as a broad exclusion from compliance.

Importantly, the GDPR does not apply only to companies physically located in the EU. Instead, it also covers any business outside the EU that offers goods or services to individuals within the EU or any of its member countries. Therefore, organizations operating globally must carefully assess their data practices to ensure they meet GDPR requirements wherever EU residents are involved.

What does the GDPR mean for American small and medium-sized companies?

Like all businesses subject to the GDPR, small and medium-sized enterprises must take compliance seriously and put appropriate structures in place. To do so effectively, SMEs should ensure they engage knowledgeable compliance staff who can design and maintain programs that include audit schedules, record-keeping controls, data processor oversight, and clearly defined compliance roles. In addition, many organizations benefit from working with third-party compliance firms that specialize in outsourced compliance services. These providers can offer objective assessments and impartial feedback on the strength of a company’s GDPR program.

At the same time, SMEs should understand the limited relief provided under Article 30 of the GDPR and avoid misinterpreting its scope. While the regulation does offer some flexibility for organizations with 250 employees or fewer, it does not exempt them from compliance. Instead, Article 30 relaxes certain record-keeping requirements only when specific conditions are met. This relief does not apply if the company conducts processing activities that pose risks to the rights and freedoms of data subjects, engages in regular or ongoing processing, or handles special categories of personal data.

As a result, small and medium-sized businesses, regardless of where they are based, must still take meaningful steps to comply with the GDPR. Failing to establish an effective and well-documented compliance program can attract regulatory scrutiny, particularly for companies that regularly interact with EU residents. Technology companies, in particular, face heightened exposure and should therefore pay close attention to GDPR obligations as part of their broader risk management efforts.

Here is what American businesses should do to comply with the GDPR

The GDPR includes numerous provisions and requirements that demand careful review by an in-house compliance professional or an experienced outsourced compliance consultant. Companies should proactively allocate resources to build and maintain a structured data collection and management program. By doing so, organizations not only strengthen GDPR compliance but also demonstrate accountability to clients, customers, and users.

As more companies fall under GDPR obligations, stakeholders naturally become more attentive to how organizations collect and use personal data. This increased awareness drives greater scrutiny and more direct questions from consumers about data practices. Rather than viewing this shift as a burden, compliance teams should recognize it as an expected outcome of stronger data protection standards and prepare accordingly. Acknowledging this trend allows organizations to respond confidently and transparently. Moving forward, companies should implement clear, practical guidelines to support consistent and compliant data handling practices.

• Analyze the data collected and processed

Businesses should begin by reviewing the data they collect from users and determining which GDPR requirements apply. Next, they should examine how that data is processed, transmitted, and ultimately used across the organization. The GDPR sets clear obligations for both data collection and data processing at every stage of the processing lifecycle, making it essential for companies to assess their practices comprehensively and ensure alignment at each step.

• Review existing policies

• Develop and implement express consent policies

The GDPR requires businesses to obtain user consent that is express, explicit, clear, and specific. Organizations must present this consent in an intelligible and easily accessible form, using plain and understandable language. Consent must be given voluntarily and presented as a standalone request, separate from all other terms and conditions. In addition, businesses must put clear mechanisms in place that allow users to withdraw their consent easily at any time.

• Data Protection policies

Businesses should develop and implement a comprehensive data protection policy that includes appropriate technical and organizational measures to support and enforce the principles outlined in the GDPR. By doing so, organizations can embed data protection into their operations, reduce risk, and demonstrate accountability in how they handle personal information.

• Develop fair processing notices

The GDPR requires businesses to clearly inform users about how data is collected, what data is collected, and why the collection occurs. In addition, organizations must explain who receives the data, how users can access it, and how long the data will be stored. To meet these obligations, businesses should develop clear and fair processing notices that keep users fully informed at every stage. At the same time, organizations must ensure they use personal data only for the specific purposes for which users provided consent, thereby maintaining transparency and trust.

• Appoint Data Protection Officers

The GDPR places a clear and critical responsibility on businesses to identify and appoint a Data Protection Officer (DPO) when required. The DPO takes primary responsibility for implementing GDPR requirements and continuously monitoring compliance across the organization. In addition, businesses must clearly communicate the DPO’s contact details to users at the time they obtain consent for data collection. By doing so, organizations promote transparency, strengthen accountability, and provide users with a direct point of contact for data protection concerns.

• Prepare for Data Access Requests

Users have the right to access their personal data, request corrections to inaccurate information, object to certain types of data processing, and, in some cases, request the complete erasure of data held by businesses. To meet these obligations, organizations must design and implement clear policies and procedures for handling such requests. They must also ensure they respond within the required timeframe, which is generally one month, to remain compliant with GDPR requirements.

• Undertake training and awareness programs

Businesses should train all internal and external stakeholders who have access to personal data, particularly those directly involved in data collection and processing activities. In addition, organizations should conduct periodic training and awareness initiatives to reinforce expectations, address evolving risks, and validate the effectiveness of the overall compliance program.

• Reporting data breaches

In the event of a serious data breach, businesses must promptly report the nature, scope, and potential consequences of the incident, along with the remedial measures taken, to the appropriate authorities within 72 hours. Following this notification, organizations should also communicate the same information to affected users, ensuring transparency and compliance with GDPR requirements.

Consequences of non-compliance