November 2015

Executives say being forced to base European data in Europe would be costly for companies, requiring new infrastructure expenses to do business in the region.

Keeping European personal information in Europe across all economic sectors would cost 1% in gross domestic product, estimates Hosuk Lee-Makiyama, director of the European Centre for International Political Economy, though he added that the impact would depend on how tightly any localization was enforced. Privacy advocates argue that data rules could lead to more spending on cloud services on servers based in Europe. Businesses in Western Europe are projected to spend $37 billion in 2015 for cloud-based services for everything, from powering their mobile apps to managing human resources data or running e-commerce platforms, according to Gartner. European regulators say their goal isn’t to stop data transfers, but to make sure that Europeans’ privacy rights are respected wherever their data are stored.

In November 2014, the Enforcement Bureau began a Wi-Fi blocking investigation of Hilton Worldwide Holdings, Inc. after receiving a complaint that the Hilton hotel in Anaheim (CA) blocked visitors’ personal Wi-Fi hotspots unless they paid the hotel a $500 fee for Hilton’s Wi-Fi. The Commission has also received complaints about other Hilton properties. To this day, however, Hilton has refused to comply with the Bureau’s Letter of Inquiry (LOI) ordering the Company to provide documents and information about its Wi-Fi management practices for all relevant Hilton properties. Instead, a Hilton subsidiary initially responded only for a single property, arguing that the scope of the Bureau’s investigation should be limited to Hilton’s activities at its Anaheim hotel. Those answers were incomplete and inadequate even for that one property. After repeated warnings that the Company’s response was inadequate, the Hilton subsidiary recently produced limited information regarding the Wi-Fi blocking systems utilized at a small number of additional Hilton properties and again failed to answer many of the questions in the LOI. We cannot and will not countenance such flouting of the FCC’s responsibility and authority.

Accordingly, we propose a penalty of $25,000 against Hilton for apparently willfully and repeatedly violating a Commission order by failing to respond to the Bureau’s LOI and obstructing the Bureau’s investigation into whether Hilton willfully interferes with consumer Wi-Fi devices in Hilton-brand hotel and resort properties across the United States. If this is not sufficient to secure Hilton’s compliance with the Bureau’s Wi-Fi blocking investigation, we are prepared to take further action in the future.