US tech group cautions against Vietnam’s draft law of hindering social media, data centers – report

A trade group representing U.S. technology companies has cautioned the government of Vietnam that a draft law to tighten rules on data protection and curb data transfers abroad would impede social media firms and data center operators from growing their businesses in the nation, Reuters reported.

The country is one of the world’s largest markets for Facebook, owned by Meta Platforms (META), and other online platforms, and intends to grow its data center industry with foreign investment in the coming years, the report added.

The draft law “will make it challenging for tech companies, social media platforms and data center operators to reach the customers that rely on them daily,” said Jason Oxman, chair of the Information Technology Industry Council, or ITI, a trade group representing tech companies including Meta, Alphabet’s (GOOG) (GOOGL) Google and data center operator such as Equinix (EQIX).

The draft rule, which is being deliberated in the parliament, is also aimed at improving authorities’ access to information and was urged by the ministry of public security, said Vietnamese and foreign officials, according to the report.

The Vietnamese lawmakers are expected to pass the draft on Nov. 30 “if eligible”, as per the ongoing parliament’s session’s plan, which is subject to changes, the report noted.

Currently, Vietnam rules limit cross-border transfers of data under some circumstances, but they are rarely enforced, as per the report.

Under the new draft law, a prior authorization is required for the overseas transfer of “core data” and “important data”, which are currently not defined properly.

The companies would also have to share data with Vietnam’s government and state organizations in several, vaguely defined cases, including for “fulfilling a specific task in the public interest,” the report added.

The U.S. tech industry has voiced its concerns with Vietnam’s authorities over “the undue expansion of government access to data,” Oxman noted.

Tech and other companies like cross-border data flows to reduce costs and improve services, but several jurisdictions, such as the EU and China, have curbed these transfers, noting that it allows them to better protect privacy and sensitive information, the report added.

It is not known how the new law, if adopted, would impact foreign investment in the country. In August it was reported that Google was considering setting up a large data center in Vietnam which would be the first such investment by a big U.S. tech giant in the Southeast Asian nation.