The Compliance of Virtual Data Rooms in Online Encrypted Sharing: Key Points of GDPR Compliance

Against the backdrop of accelerating digital transformation, Virtual Data Rooms (VDRs) have become essential tools for enterprises to implement online encrypted file sharing, leveraging their convenience, efficiency, and security. However, when handling data of EU users, the use of VDRs must strictly comply with the General Data Protection Regulation (GDPR). As a pivotal global data protection regulation, GDPR imposes numerous requirements on the compliance of online encrypted sharing via VDRs. Mastering these key points is crucial for enterprises to avoid legal risks and ensure data security.

GDPR mandates that data processing must be based on lawful grounds. When using VDRs, enterprises need to clarify the basis for data processing. Common lawful grounds include the data subject’s consent, necessity for contract performance, and compliance with legal obligations. For example, when an enterprise shares commercial contract-related documents with EU clients through a VDR, the data processing falls under the necessity for contract performance. If it involves collecting additional personal preference data from clients to optimize file sharing, explicit consent from the clients must be obtained. Enterprises should carefully assess data processing scenarios, select appropriate lawful bases, and retain relevant evidence.

GDPR grants data subjects multiple rights, and implementing these rights is vital in online encrypted sharing via VDRs. Data subjects have the right to access, correct, and delete their personal data. Enterprises should set up user-friendly operation interfaces on VDR platforms to ensure data subjects can exercise these rights easily. When a data subject requests data deletion, the enterprise must not only delete visible files stored in the VDR but also erase data traces in related backups and caches. Additionally, the data subjects’ “right to be forgotten” and “right to data portability” must be protected, requiring enterprises to have corresponding data processing mechanisms to meet reasonable demands from data subjects.

The data minimization principle requires enterprises to collect and process only the minimum data necessary to achieve specific purposes. In VDRs, enterprises should avoid excessive data collection. For instance, in file sharing scenarios, only essential personal information related to file receipt and access—such as names and email addresses—should be collected, rather than irrelevant sensitive information. The purpose limitation principle stipulates that data processing should be confined to the purposes initially disclosed to data subjects. If an enterprise intends to use data from VDRs for other purposes, it must obtain fresh consent from data subjects to prevent data abuse.

GDPR emphasizes that enterprises should adopt appropriate technical and organizational measures to ensure data security, and online encrypted sharing via VDRs must meet this requirement. Enterprises should use encryption algorithms conforming to industry standards, such as AES-256, to encrypt files, ensuring data confidentiality during storage and transmission. Meanwhile, strict access control mechanisms should be established to set differentiated permissions for different users—for example, allowing only specific personnel to view, edit, or download files. Additionally, regular security audits and vulnerability scans of VDRs should be conducted to promptly fix potential security loopholes and prevent data breach risks.

 

When VDRs involve transferring EU data outside the region, GDPR stipulates strict rules. Enterprises can use the European Commission-approved Standard Contractual Clauses (SCCs) to sign agreements with overseas recipients, ensuring data is adequately protected during transmission. Approved certification mechanisms, such as the EU-U.S. Privacy Shield framework (when meeting relevant requirements), can also be adopted. Regardless of the method chosen, enterprises must fully assess the data protection capabilities of overseas recipients to ensure they meet data protection standards comparable to GDPR.

GDPR compliance for online encrypted sharing via VDRs covers all links of data processing. Enterprises need to integrate each key point of GDPR into the use and management of VDRs. Only by strictly adhering to regulatory requirements can enterprises safeguard data subjects’ rights, fully leverage the advantages of VDRs, and achieve secure, compliant data sharing and business development.