Are you being served? Legal deep dive into Lidl’s data storage offering for businesses

Tim Heywood FRSA, data protection, public law & outsourcing partner at gunnercooke, has recently investigated the German supermarket chain, Lidl, and how its retail offering has expanded beyond food and drink, with high street stories including a range of high-tech digital services to corporate customers.

Lidl’s offering

“It seems that, in the process of examining the market for suitable existing data storage and services providers such as AWS for their own internal business needs, Lidl realised that none of them offered data processing entirely within the EU. None of them offered the level of transparency and control that Lidl required. Since they couldn’t buy what they wanted, they decided instead to build their own and then offer it out as a commercial service to third parties.

“Offering cybersecurity and wider data services, the division now called Schwarz Digits, promote their new cloud services with the USP that all their cloud servers are based either in Germany, Lidl’s home country or Austria (both EU Member States).

“Why might this be of value to the customers? Well, the attraction appears to be that the EU’s much admired data protection laws, IP and technology regulation will apply to all the data being stored and processed. There also appears to be an economic appetite in Germany and elsewhere in Europe for a stronger homegrown cloud infrastructure, one that does not rely on the use of servers situated in the USA or China.

“This is important not just for personal data (guaranteeing high levels of privacy) but for corporate data too (ensuring high levels of security, availability, and IP protection).

“Combining their cybersecurity and cloud services with an ambition to develop strong AI based solutions, their intent is evident from the fact that they appear to have instructed their staff not to use the ChatGPT function for any of their work for fear of disclosing valuable knowledge to potential competitors in this fast-growing market.

Conclusion

“So, have Lidl got this right? Well, the signs are good. They have already signed up major business clients including the City of Hamburg, Bayern Munich football club and even the huge software group, SAP. Turnover for the last financial year was around €1.9 billion.

“It appears that a data service provider who sets high store by data protection, privacy and technology regulation is not automatically putting itself at a competitive disadvantage with those businesses that are less circumspect.

“Perhaps UK based organisations can take heart from Lidl’s very positive experience and explore options for controlling their data here in the UK and giving smaller providers of data services a fighting chance against the tech monoliths.”