China: New Draft Car Privacy and Security Regulation is Open for Public Consultation
The author thanks Hunter Dorwart for his contribution to this text.
The Cyberspace Administration of China (CAC) released a draft regulation on car privacy and data security on May 12, 2021. China has been very active in automated vehicle development and deployment and has also proposed last fall a draft comprehensive privacy law, which is moving towards adoption likely by the end of this year.
The draft car privacy and data security regulation (“Several Provisions on the Management of Automobile Data Security”; hereinafter, “draft regulation”) is interesting for those tracking automated vehicle (AV) and privacy regulations around the world and is relevant beyond China – not only due to the size of the Chinese market and its potential impact on all actors in the “connected cars” space present there, but also because dedicated legislation for car privacy and data security is novel for most jurisdictions. In fact, the draft regulation raises several interesting privacy and data protection aspects worthy of further consideration, such as its strict rules on consent, privacy by design, and data localization requirements. The CAC is seeking public comment on the draft, and the deadline for comments is June 11, 2021.
The draft regulation complements other regulatory developments around connected and automated vehicles and data. For example, on April 29, 2021, the National Information Security Standardization Technical Committee (TC 260), which is jointly administered by the CAC and the Standardization Administration of China, published a draft Standard on Information Security Technology Security Requirements for Data Collected by Connected Vehicles. The Standard sets forth security requirements for data collection to ensure compliance with other laws and facilitate a safe environment for networked vehicles. Standards like this are an essential component of corporate governance in China and notably fill in compliance gaps left in the law.
The publication of the draft regulation and the draft standard indicate that the Chinese government is turning its attention towards the data and security practices of the connected cars industry. Below we explain the key aspects of this draft regulation, summarize some of the noteworthy provisions, and conclude with the key takeaways for everyone in the car ecosystem.
Broad scope of covered entities: from OEMs to online ride-hailing companies
The draft regulation aims to strengthen the protection of “personal information” and “important data,” regulate data processing related to cars, and maintain national security and public interests. The scope of application of this draft regulation is fairly broad, both in terms of who it applies to and the types of data it covers.
The draft regulation applies to “operators” that collect, analyze, store, transmit, query, utilize, delete, and provide (activities collectively referred to as processing) personal information or important information overseas (during the design, production, sales, operation, maintenance, and management of cars) and “within the territory of the People’s Republic of China.”
“Operators” are entities that design or manufacture cars, or service institutions such as OEMs (original equipment manufacturers), component and software providers, dealers, maintenance organizations, online car-hailing companies, insurance companies, etc. (Note: The draft regulation includes “etc.,” here and throughout, which appears to mean that it is a non-exhaustive list.)
Covered data: Distinction among “personal information,” “important data,” and “sensitive personal information”
The draft regulation considers three data types, with an emphasis on “personal information” and “important data”, which are defined terms under Article 3. In addition, there is also a third type mentioned within the draft, at Article 8, and in a separate press release document: “sensitive personal information.”
Personal information includes data from car owners, drivers, passengers, pedestrians, etc. (non-exhaustive list) and also includes information that can infer personal identity and describe personal behavior. This is a broad definition and is notable because it explicitly includes information about passengers and pedestrians. As the business models evolve and the ecosystem of players in the car space grows, it has become more important to consider individuals other than just the driver or registered user of the car. The draft regulation appears to use the words “users” and “personal information subjects” when referring to this group of individuals broadly and also uses “driver,” “owner,” and “passenger” throughout.
The second type of data covered is “important data,” which includes:
- Data on the flow of people and vehicles in important sensitive areas such as military management zones, national defense science and industry units involving state secrets, and party and government agencies at or above the county level;
- Surveying and mapping data higher than the accuracy of the publicly released maps of the state;
- Operating data of the car charging network;
- Data such as vehicle types and vehicle flow on the road;
- External audio and video data including faces, voices, license plates, etc.;
- Other data that may affect national security and public interests as specified by the State Cyberspace Administration and the relevant departments of the State Council.
The inclusion of this data type is notable because it is defined in addition to “sensitive personal information” and includes data about users and infrastructure (i.e., the car charging network). Article 11 prescribes that when handling important data, operators should report to the provincial cyberspace administration and relevant departments the type, scale, scope, storage location and retention period, the purposes for collection, whether it was shared with a third party, etc. in advance (presumably in advance of processing this type of data, but this is something that may need to be clarified).
The third type of data mentioned in the draft regulation is “sensitive personal information,” and this includes vehicle location, driver or passenger audio and video, and data that can be used to determine illegal driving. There are certain obligations for operators processing this type of data (Articles 8 and 16).
Article 8 prescribes that where “sensitive personal information” is collected or provided outside of the vehicle, operators must meet certain obligations:
- Ensuring that it is for the purpose of directly serving the driver or passenger (e.g., enhancing driver safety, assisting driving, navigation, entertainment, etc.),
- Informing the driver and passengers that this data is being collected through a display panel or voice in the car,
- Ensuring that the driver consents and authorizes the collection each time they enter the car (the default is not to collect),
- Allowing the driver to terminate data collection at any time,
- Allowing the vehicle owner to view and make inquiries about the sensitive personal information collected, and
- Enabling deletion of this data upon request by the driver (the operator shall delete it within two weeks).
The definitions of these three types of data mirror similar definitions in other Chinese laws or draft laws currently being considered for adoption, such as the Civil Code and, respectively, the Personal Information Protection Law and the Cybersecurity Law. Consistency across these laws indicates a harmonization of China’s emerging data governance regulatory model.
Obligations based on the Fair Information Practice Principles
Articles 4 – 10 include many of the fair information practice principles, such as purpose specification and data minimization in Article 4 and security safeguards in Article 5, as well as privacy by design (Articles 6(4), 6(5), and 9). There are a few notable provisions worth discussing in more detail which are organized under the following headings below: local processing, transparency and notice, consent and user control, biometric data, annual data security management, and violations and penalties.
Local (“on device”) processing
Personal information and important data should be processed inside the vehicle, wherever possible (Article 6(1)). Where data processing outside of the car is necessary, operators should ensure the data has been anonymized wherever possible (Article 6(2)).
Transparency and Notice
When processing personal information, the operator is required to give notice of the types of data being collected and provide the contact information for the person responsible for processing user rights (Article 7). This notice can be provided through user manuals, onboard display panels, or other appropriate methods. The notice should include the purpose for collection, the moment that personal information is collected, how users can stop the collection, where and for how long data is stored, and how to delete data stored in the car and outside of the vehicle.
Regarding sensitive personal information (Article 8(3)), the operator is obliged to inform the driver and passengers that this data is being collected through a display panel or a voice in the car. This provision does not include “user manuals” as an example of how to provide notice, which potentially means that this data type is worthy of more active notice than personal information. This is notable because operators cannot rely on notice being given through a privacy notice placed on a website or in the car’s manual.
Consent and User Control, including a two-week deletion deadline
Article 9 requires operators to obtain consent to collect personal information, except where laws do not require consent. This provision notes that consent is often difficult to obtain (e.g., collecting audio and video of pedestrians outside the car). Because of this difficulty, data should only be collected when necessary and should be processed locally in the vehicle. Operators should also employ privacy by design measures, such as de-identification on devices.
Article 8(2) (requirements when collecting sensitive personal information) requires operators to obtain the driver’s consent and authorization each time the driver enters the car. Once the driver leaves the driver’s seat, that consent session has ended, and a new one must begin once the driver gets back into the seat. The driver must be able to stop the collection of this type of data at any time, be able to view and make inquiries about the data collected, and request the deletion of the data (the operator has two weeks to delete the data). It is worth noting that Article 8 includes six subsections, some of which appear to apply only to the driver or owner and not passengers or pedestrians.
These consent and user control requirements are quite notable and would have a non-trivial impact on the design of the car, the user experience, as well as the internal operations of the operator. It could potentially impact the user experience negatively if consent and authorization were required each time the driver got into the driver’s seat. For example, a relevant comparable experience is using a website and facing the consent-related pop-ups that must be closed out before being able to read or use the website at every visit. Furthermore, stopping the collection of location data, video data, and other telematics data (if used to determine illegal driving) could also present safety and functionality risks and cause the car not to operate as intended or safely. These are some of the areas where stakeholders are expected to submit comments for the public consultation.
Biometric data is mentioned throughout the draft regulation, as this type of data is implicitly or explicitly included in the definitions of personal information, important data, and sensitive personal information. Biometric data is specifically mentioned in Article 10, which is about the biometric data of drivers. Biometric data is an increasingly common data type collected by cars and deserves special attention. Article 10 would require that the biometric data of the driver (e.g., fingerprints, voiceprints, faces, heart rhythms, etc.) only be collected for the convenience of the user or to increase the security of the vehicle. Operators should also provide alternatives to biometrics.
Articles 12-15 and 18 concern data localization. Both personal information and important data should be stored within China, but if it is necessary to store elsewhere, the operator must complete an “outbound security assessment” through the State Cyberspace Administration, and the operator is permitted to send only the data specified in that assessment overseas. The operator is also responsible for overseeing the overseas recipient’s use of the data to ensure appropriate security and for handling all user complaints.
Annual data security management status
Article 17 places additional obligations on operators to report their annual data security management status to relevant authorities before December 15 of each year when:
- They process personal information of more than 100,000 users, or
- They process important data.
Given that this draft regulation applies to passengers and pedestrians in addition to drivers, it would not take long for the threshold of 100,000 users to be met, especially for operators who manage a fleet of cars for rental or ride-hail. Additionally, since the definitions of personal information and important data are so broad, it is likely that many operators would trigger this reporting obligation. The obligations include recording the contact information of the person responsible for data security and handling user rights; recording relevant information about the scale and scope of data processing; recording with whom data is shared domestically; and other security conditions to be specified. If data is transferred overseas, there are additional obligations (Article 18).
Violations and Penalties
Violation of the regulations would result in punishment in accordance with the “Network Security Law of the People’s Republic of China” and other laws and regulations. Operators may also be held criminally responsible.
China’s draft car privacy and security regulation provides relevant information for policymakers and others thinking carefully about privacy and data protection regarding cars. The draft regulation’s scope is very broad and includes many players in the mobility ecosystem beyond OEMs and suppliers (e.g., online car-hailing companies and insurance companies).
With regards to user rights, the draft regulation recognizes that other individuals, in addition to the driver, will have their personal information processed and provides data protection and user rights to these individuals (e.g., passengers and pedestrians). The draft regulation would apply to three broad categories of data (personal information, important data, and sensitive personal information).
In privacy and data protection laws from the EU to the US, we have continued to see different obligations arise depending on the type or sensitivity of data and how data is used. This underscores the need for organizations to have a complete data map; indeed, it is crucial that all operators in the connected and automated car ecosystem have a sound understanding of what data is being collected from which person and where that data is flowing.
The draft regulation also highlights the importance of transparency and notice, as well as the challenges of consent and user control. It is a challenge to appropriately notify drivers, passengers, and pedestrians about all of the data types being collected by a vehicle.
Privacy and data protection laws will have a direct impact on the design, user experience, and even the enjoyment and safety of cars. It is crucial that all stakeholders are given the opportunity to provide feedback in the drafting of privacy and data protection laws that regulate data flows in the car ecosystem and that privacy professionals, engineers, and designers become much more comfortable working together to operationalize these rules.
Check out other blogs in the Global Privacy series: