United Arab Emirates - Regulatory Boundaries
Three potential regulatory barriers which could influence Fitbit’s ability to succeed in the United Arab Emirates market include the need for Fitbit to have an agent or a distributor in order to operate in the UAE, a law which states that citizens traveling to and from UAE might have problems using Fitbit as their data collected in the UAE will not be able to be transferred outside the country, and an impending GDPR-like law which means the company might have to implement stricter policies regarding how it uses and shares data for consumers who are living and visiting the UAE.
United Arab Emirates Regulatory Boundaries
1. Having A Sponsor, An Agent or A Distributor
- In order to conduct business in the whole of UAE, which includes all territories outside one of the free zones, any foreign business has to have a UAE national sponsor. The ownership of the business can be up to 49% in the hands of the foreign business "unless its business can be found on the UAE Government positive sectors list where up to 100% foreign ownership is allowed."
- The main objective of this law is to provide motivation to large global corporations to invest in UAE, specifically when it comes to the fields of innovation, technology, space, renewable energy, and artificial intelligence.
- In order to be able to sell products or services in the UAE, the foreign corporation needs to have an agent or a distributor for all industries except food products. According to UAE law, "terminating a non-performing agent, or a distributor, is extremely difficult" and can severely damage the expansion or the success of the foreign business in the UAE.
- For Fitbit, this means that the company will need to find an agent or a distributor in order to operate in the UAE.
2. Data Sharing Prohibition (Data Localization)
- Fitbit is an American company that manufactures "activity trackers, wireless-enabled wearable technology devices that measure data such as the number of steps walked, heart rate, quality of sleep, steps climbed, and other personal metrics involved in fitness."
- In May 2019, the United Arab Emirates (UAE) federal government issued Federal Law No. 2 of 2019 regarding the Use of Information and Communication Technology (ICT) in Health Fields (ICT Health Law). The law is set up to regulate the "optimal use of ICT in health fields" and to "ensure safety and security of health data and information."
- The law is specifically focused on all entities in the UAE providing "medical services, health insurance or national health insurance services, brokerage services, claims management services or electronic services in the medical field" and is targeting "health information that were processed and were given a visual, audible or readable indication, and that may be attributed to the health sector."
- According to the ICT Health Law, the law "imposes a general prohibition on the transfer, storage, generation or processing of Health Information and data related to the provision of health services in the UAE to countries outside the UAE."
- For Fitbit, this means that citizens traveling to and from UAE might have problems using Fitbit as their data collected in the UAE will not be able to be transferred outside the country.
3. Impending GDPR-like Law
- The UAE announced a plan to roll out a new cybersecurity strategy during the next three years. This strategy will involve 60 initiatives that will be executed to involve nine crucial infrastructures including the government, energy, ICT, electricity and water, finance and insurance, emergency services, health, transportation, and food and agriculture.
- The idea is to enhance cybersecurity laws by looking at GDPR as an example of how regulations can be put in place in order to address all types of cybercrimes and tighten the protection of businesses.
- The GDPR-like law will "mandate cybersecurity implementation certification for government suppliers" as well as companies who are operating business within the UAE borders in the private sector.
- For Fitbit, this means the company might have to implement stricter policies regarding how it uses and shares data for consumers who are living and visiting the UAE.