Vulcan Insight | Shaping Europe’s digital future: Assessing the EU’s new Data Act

On Wednesday, the European Commission formally adopted the proposed regulation on harmonised rules on fair access to and use of data, otherwise known as the Data Act. The Data Act forms a key cornerstone of the European strategy for data, and is expected to make a crucial contribution to the digital transformation objective of the “Digital Decade”.

Through the Act, the European Union aims to kick-start innovation across all member states by pushing companies across all sectors of Europe’s economy to share more of their data. In particular, the EU is targeting data generated by machines, aiming to clear up confusion about data ownership while simultaneously seeking to foster a new generation of applications and services.

The EU, according to an impact assessment on the Data Act released in May 2021, views the right to use certain data as valuable and by extension, believes this value should be allocated fairly across all sectors of the economy. As such, the Data Act seeks to codify data-sharing practices across a range of different situations, including between businesses, between businesses and public bodies, in underpinning data infrastructure such as cloud services, or where non-personal data is transferred across transnational borders into non-EU territories. The Data Act establishes rules pertaining to data access and data use in each of these situations. In the future, the Data Act will likely be complemented with additional, secondary legislation for specific sectors.

While the EU sees the release of data as a positive thing, corporate executives are concerned that parting with such data may see them lose a valuable commodity, or indeed, their competitive advantage. Some corporate bodies and representative groups claim that an “incentives rather than obligations” model would be a better approach to enabling data-sharing while others claim the already existing approach to data-sharing constitutes a “functioning system […] that relies heavily on contracts”. The restrictions might end up costing the EU economy too, with a study commissioned by the CCIA indicating that restrictions beyond personal data may cost 0.6% of the EU’s Gross Domestic Product.

There are also concerns about how the regulation might force businesses to provide public bodies with access to privately held data on occasions where public bodies demonstrate “an exceptional need”, such as during the COVID-19 pandemic. Industry is concerned about the scope of these measures given how many companies base their business models on data, and where a government might view this dataset as public, the concomitant business models may be put under pressure.

In sum, the Data Act introduces the following key measures:

• measures to “increase legal certainty” for companies and consumers who generate data regarding who can use what such data and how, and when;
• measures to “prevent abuse of contractual imbalances” that hinder fair and just data sharing such that SMEs, for example, will be protected against unfair contractual terms being imposed by a party with significantly greater market position;
• measures by which public sectors bodies can access and use data held by the private sector that is necessary “for specific public interest purposes”; and
• rules setting the framework for customers to “effectively switch” between different providers of data-processing services. The EU believes these rules will unlock its cloud market.

Compliments of Vulcan Consulting – a member of the EACCNY.