Personal Data as a Dual-Use Technology: Navigating Privacy and National Security Conflicts

Personal data has long been framed as a resource monetised through advertising and governed by consent-based frameworks balancing individual rights against corporate interests. Regulators are increasingly treating it as something more consequential: a genuine security threat when exposed to adversarial foreign states. The implications for data fiduciaries are profound in the context of dual-use technology. When personal data enables foreign intelligence operations or informs military targeting, traditional data protection law is structurally inadequate. This blog examines how the dual-use paradigm has emerged, different regulatory regimes responses, individual rights concerns, and how compliance professionals must navigate the complexity. 

The Dual-Use Concept: From Hardware to Personal Data 

Dual-use technology refers to goods and knowledge that serve both civilian and military ends from nuclear reactors, satellite imaging systems, encryption algorithms. Export control regimes such as the International Traffic in Arms Regulations (ITAR) and the Commerce Control List (CCL) under the Bureau of Industry and Security have long subjected such items to licensing requirements, end-use certifications, and outright prohibitions on transfer to certain states. 

The national security case rests on a well-documented empirical claim: that foreign adversaries with state-sponsored AI programmes, are capable of aggregating commercially available data like geolocation records, biometric identifiers, financial histories, health information and deriving strategic value. A 2021 assessment by the Office of the Director of National Intelligence (ODNI)  found that foreign adversaries were able to analyse and manipulate large quantities of personal data to target, influence, or coerce individuals and groups in the US and allied countries. The report explicitly underscored the need to develop a way to counter the exploitation of Americans’ sensitive data and digital authoritarianism.  

A Jurisdictional Analysis of Regulatory Response  

1. The United States: Data as Export-Controlled Asset 

Since 2024, The United States has moved to construct legal definitions related to personal data as a dual-use asset. This represents the first time in U.S. law where personal data has been treated as a dual-use technology with both military and civilian applications as a unified regulatory concept. 

The Department of Justice’s Data Security Programme (DSP) Final Rule prohibits and restricts bulk transfers of Americans’ sensitive personal data to six “countries of concern”. The data categories covered include precise geolocation information, biometric identifiers, human genomic data, health data, financial data, and covered personal identifiers. Critically, the Rule applies irrespective of whether data has been pseudonymised or encrypted. 

Unlike consumer-protection statutes enforced by the Federal Trade Commission, the DSP Rule is administered by the National Security Division of the Department of Justice and carries civil penalties of up to USD 368,136 per violation and criminal penalties of up to USD 1,000,000 and twenty years’ imprisonment for wilful violations. The compliance obligations imposed are data mapping, vendor due diligence, CISA-aligned cybersecurity controls, record-keeping, and annual certification, which are compatible with export control regimes. 

The Protecting Americans’ Data from Foreign Adversaries Act (PAFDA), 2024 prohibits data brokers from selling sensitive personal data of U.S. individuals to entities controlled by foreign adversary nations. The Protecting Americans from Foreign Adversary Controlled Applications Act, which required the Chinese IT company ByteDance to divest TikTok or face a nationwide ban, addressed both data access and the risk of content manipulation by a foreign-controlled platform represents a different risk from that of a conventional data broker. 

Following the Foreign Investment Risk Review Modernisation Act of 2018 (FIRRMA), The Committee on Foreign Investment in the United States (CFIUS) was directed to examine whether proposed transactions would expose personally identifiable information of U.S. citizens to foreign government access in ways that threaten national security which was reflected in the 2018 blocked acquisition of MoneyGram by China’s Ant Financial. 

2. The European Union: Proportionality as Constraint 

Under the EU Charter of Fundamental Rights, both privacy and data protection are recognised as independent fundamental rights, meaning any restriction on their exercise is subject to limitation under Article 52 (1). Article 23 of the General Data Protection Regulation (GDPR) permits Member States to restrict data subjects’ rights and controllers’ obligations where such restriction constitutes a “necessary and proportionate measure in a democratic society” to safeguard, inter alia, national security, defence, and public security. 

The European Data Protection Board’s Guidelines 10/2020 on Article 23 restrictions make clear that these exemptions are to be interpreted narrowly, applied on a case-by-case basis, and never deployed as a blanket override of data protection principles. Even where restrictions apply, the accountability principle under Article 5(2) GDPR. 

The GDPR's cross-border transfer framework consisting the Standard Contractual Clauses, adequacy decisions under Article 45 GDPR, and Binding Corporate Rules function as national security cum data protection initiatives. The landmark case of  Schrems II in the Court of Justice of the EU (CJEU, 2020) invalidated the EU-U.S. Privacy Shield precisely because U.S. intelligence law, particularly Section 702 of the Foreign Intelligence Surveillance Act, did not offer data subjects remedies equivalent to those available under EU law. The resulting EU-U.S. Data Privacy Framework, adopted in 2023, was designed in part to address these national security access concerns and the EU’s emphasis on reciprocity and proportionality.  

3. India: Broad Exemptions and the Constitutional Question 

India’s Digital Personal Data Protection Act, 2023 (DPDP Act) is the country’s first comprehensive data protection statute. However, the treatment of the privacy-security intersection is rather nascent and subject to criticism. Section 17(2)(a) of the Act empowers the Central Government to exempt any state instrumentality from the Act's provisions in the interests of sovereignty, integrity, security of the state, friendly relations with foreign nations, or the maintenance of public order. 

The breadth of this exemption is constitutionally significant. Unlike the GDPR's Article 23 which requires restrictions to be defined by legislative measure, proportionate, subject to detailed procedural safeguards, Section 17(2) of the DPDP Act confers executive discretion to designate which agencies are exempt with a government notification. As scholars have noted, the grounds are framed in open-ended language that effectively confers a freehand on the executive to suspend statutory privacy protections on demand. 

This creates a structural tension with the pivacy jurisprudence pioneered in the case of Justice K.S. Puttaswamy (Retd.) v. Union of India and  Anuradha Bhasin v. Union of India, (2020) , the Supreme Court established that any restriction on the right to privacy must satisfy a three-part test: legality, legitimate aim, and proportionality.  

The DPDP Rules 2025, operationalise the consent-based and notice architecture of the Act, but leave the Section 17 exemption regime substantively unchanged. This combined effect of broad state exemptions with no judicial oversight mechanism risks transforming the Act from a rights-based instrument into a data governance framework that facilitates state surveillance. 

Where the Tensions Lie: Privacy, Security, and the Proportionality Problem 

The dual-use framework, as it has emerged across these three jurisdictions, generates a set of distinct tensions that compliance professionals and policymakers must take seriously as operational realities. 

1. Breadth of Definition and the Aggregation Risk 

A recurring problem in dual-use data regulation is the definitional scope. The DOJ’s DSP Rule defines “sensitive personal data” broadly and applies bulk thresholds that are relatively low given the volumes typically processed by large organisations. The Rule applies even where data has been pseudonymised, anonymised, or encrypted, because the DOJ has assessed that state-level actors possess re-identification capabilities.  

The issue lies in aggregated innocuous data due to which intelligence services have long relied on the mosaic theory; combining open-source information blocks availability of intelligence products from a single source. The compliance challenge is that organisations cannot easily assess when their data holdings cross the threshold from commercially sensitive to nationally important. 

2. The Consent Exception and Its Limits 

The DOJ’s DSP Rule explicitly rejects consent exception. The Department declined to adopt a mechanism that would have permitted bulk sensitive data transfers to countries of concern where individual data subjects had affirmatively consented because national security t 

hreat is assessed as systemic not individual. The risk arises from the aggregated dataset held by a foreign adversary, not from any individual’s choice to share their information.  

The DPDP Act treats consent under Section 6 as the primary legal basis for data processing. Organisations operating in India with international data flows will need to assess whether their data architecture is exposed to risks that domestic privacy law does not equip them to manage. 

3. The Oversight Deficit 

The consequential problem across these jurisdictions is the question of oversight. In the United States, the CFIUS proceedings are conducted confidentially. The balance between security necessity and privacy rights is therefore assessed within a framework that lacks the transparency required of executive action affecting fundamental rights. 

The DPDP Act establishes a Data Protection Board of India with adjudicatory functions, but the Board does not have jurisdiction to examine state instrumentalities exempted under Section 17. The absence of an independent oversight mechanism for state data processing comparable to the Privacy and Civil Liberties Oversight Board (PCLOB) in the United States or the role of supervisory authorities in the EU means that Section 17 exemptions operate without institutional accountability.  

Implications for Compliance: What Data Fiduciaries Must Address 

The emergence of personal data as a dual-use regulatory category has practical consequences that organisations are only beginning to internalise. Three implications deserve particular attention. 

1. Data mapping can no longer be treated as a privacy compliance exercise alone. The DSP Rule requires organisations to assess whether their data holdings including those held by data fiduciaries constitute “bulk US sensitive personal data” and whether it creates exposure to a country of an anonymised person. This requires understanding its entire transfer chain and international employment arrangements. 

   
   

2. Cross-functional expertise is required within compliance teams. Privacy professionals who have not previously engaged with export control frameworks, sanctions programmes, or national security law are now subject to regulations that carry criminal penalties and are enforced by prosecutors rather than data protection authorities. The IAPP has advised that privacy professionals should consider bringing national security expertise into the compliance function, either through in-house hiring or external counsel. 

3. Evaluation of the risk profile of data must be against the threat landscape. An organisation holding biometric data on many individuals may face a national security compliance obligation even where that data satisfies domestic privacy law.  

Conclusion 

The treatment of personal data as a dual-use technology marks a genuinely novel development in the legal landscape of data governance. It reflects an empirically grounded assessment that personal data, in sufficient volume and in the hands of a capable adversary, constitutes a national security risk that commercial privacy law was never designed to address. The regulatory response particularly the U.S. DOJ’s Bulk Data Rule, the CFIUS framework, and the emerging restrictions on foreign adversary-controlled platforms represents an attempt to bring data flows within the same export-control logic that has long governed sensitive hardware and military technology. 

The critical challenge is to ensure that this necessary expansion of data governance does not erode the individual rights protections that privacy law exists to secure. The insistence on proportionality in security restrictions, raising legitimate concerns about broad that are constitutionally unsustainable, and structural accountability that dual-use regulation requires. For organisations, the immediate implications are data mapping, vendor management, and cross-border transfer compliance are no longer purely privacy functions, they are national security functions with enforcement consequences. Managing this transition effectively will be those that treat their data governance architecture not merely as a compliance overhead but as a strategic asset: one that simultaneously protects individuals, safeguards the organisation, and contributes to the broader objective of maintaining data integrity in an increasingly contested geopolitical environment.