Data privacy is usually viewed through the lens of consumer protection, aiming to prevent excessive use of personal information, identity theft, and annoying targeted ads. But there are other, very serious aspects to consider. The implementation of the Department of Justice’s (DOJ) Data Security Program (DSP) Rule reminds us that data privacy is a top-tier national security concern. 

While this regulation is relatively new, the issue has been raised before. In 2022, when discussing the probklems surrounding TikTok, for example, then FBI Director Christopher Wray warned of “The possibility that the Chinese government could use to control data collection on millions of users or control the recommendation algorithm, which could be used for influence operations if they so chose or to control software on millions of devices, which gives the opportunity to potentially tactically compromised personal devices.”

Here is a breakdown of what the new rule means and the broader lessons we can learn from it.

The DSP Rule at a glance

The DSP Rule is designed to prevent "countries of concern", a list that currently includes China, Russia, Iran, North Korea, Cuba, and Venezuela, from weaponizing the personal data of Americans. Unlike previous privacy laws that focus on how data is collected, this rule focuses on where it goes and who can see it.

• Targeted data types: The rule governs a significant volume of sensitive personal data. It is focused on the following six categories: human genomic data, biometric identifiers, precise geolocation data, personal health information, financial records, and certain personal identifiers.

• The threshold: The law is only triggered when data exceeds specific volume thresholds. For example, genomic data is restricted to just 100 individuals, while personal identifiers are restricted to 100,000.

• Prohibited vs. restricted: Certain transactions, such as selling bulk data to brokers linked to countries of concern or transferring genomic data, are banned entirely. Other transactions are allowed only if the company implements strict security guardrails defined by CISA.

• The compliance burden: Under the law’s “Know your data” requirements, companies must maintain Data Compliance Programs (DCPs). This includes conducting risk assessments, implementing encryption and multi-factor authentication, and performing audits.

Three Strategic Lessons

The DSP Rule signals a changing digital landscape. Businesses that look past the checklist will find three critical takeaways for their long-term strategy.

1. Privacy’s national defense role

The DOJ’s move confirms that in the hands of a foreign adversary, a database becomes a target list. Hostile actors can engage in sophisticated espionage, blackmail, or influence operations.

For companies, this means privacy is a core component of risk management. When a company fails to protect its data, it isn't just risking a fine or a PR crisis, but is potentially creating a national security vulnerability. 

2. Federal digital oversight

Historically, the US has lacked a unified federal privacy law, leading to a focus on state regulations like California’s CCPA. However, the DSP Rule, combined with recent actions such as the Executive Order on AI, signals that the federal government is moving toward a more assertive, centralized role.

Interestingly, we are seeing a push for federal uniformity to prevent states from creating conflicting restrictions that might hinder national technological goals. The federal government is increasingly stepping in to define the rules for high-stakes technologies and data operations. 

3. A visible data supply chain

Perhaps the most practical lesson from the DSP Rule is the urgent need for radical transparency in data workflows, because you cannot secure what you cannot see. The rule holds companies responsible for data that reaches a covered person, even if that happens through a third-party vendor or a sub-processor.

In many modern organizations, shadow IT and shadow AI practices are a serious issue. Employees may use unauthorized AI tools or SaaS platforms to process data, unaware that the backend servers or the parent company are located in a country of concern. The DOJ's rule makes this ignorance a liability.

To stay compliant, companies must map their entire data lifecycle. This means:

• Knowing exactly where data is stored.
• Auditing the ownership structures of all software vendors.
•  Preventing the use of shadow AI tools that might be transferring bulk data into insecure or prohibited jurisdictions.

By treating data as a strategic resource that requires federal-level protection, the DOJ has raised the stakes for every organization that handles American information. Compliance is no longer just about protecting the consumer - it’s about protecting the country. Moving forward, the most successful companies will be those that integrate data visibility and national security awareness into the very fabric of their operations. 

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