The Confederation of British Industry (CBI) says the European Commission's proposed data protection review will "restrict and burden businesses and threaten innovation".

In a submission to the Ministry of Justice's ‘Call for Evidence on the European Commission's data protection proposals', the CBI said the proposed regulation will threaten many innovative business models, which rely on data-sharing to generate revenue. It also said that added compliance will place a cost burden on all businesses, which may deter investment and be passed on to consumers.

Matthew Fell, CBI director for competitive markets, said: “Many novel business models rely on data-sharing to generate revenue and offer a more individually tailored user experience. Advertising and subscription-based online music-sharing services are a good example, where we've recently seen ground-breaking innovation through partnerships with social-networking sites.

“Sharing information about music likes and dislikes online, without sharing the actual content, means millions more customers can now legally enjoy listening to music online – a lifeline for the flagging music industry.

“It's innovative businesses like these, on and offline, which will be threatened by restrictive controls on data-sharing proposed by the EC, while the cost of compliance will burden all industries, deter investment, and ultimately be passed on to consumers.

“Since innovation is a key driver of economic growth, it's vital that governments here and in Europe support cutting-edge businesses to continue to innovate, before they get left behind by the rest of the world.”

The CBI said compliance costs have been overlooked, and to ensure businesses can stay competitive and support growth, the European Commission must balance the data protection rights of individuals with the needs of customers and businesses.

It said equipping a call centre to handle issues arising from the proposed changes could cost around £100,000; the appointment of a data protection officer between £30,000 and £75,000 a year; and expanding the role of the Information Commissioner's Office in the UK to process additional data-protection work could place a further cost burden on taxpayers.