March 26, 2024

Understanding the EU Data Act

Facilitating the Free Flow of Data in the Digital Single Market

Navigating the EU Data Act

In recent years, data-driven technologies have had transformative effects on all sectors of the economy. Especially, the proliferation in products connected to the Internet of Things has increased the volume and potential value of data for consumers, businesses and society.

Data of high quality and that is interoperable across various sectors enhances competitiveness and drives innovation, contributing to sustainable economic growth. As such, a single dataset can be leveraged repeatedly for multiple uses without diminishing in quality or volume, offering boundless potential for application.

To break down barriers and bring this new reality to life the European Union (EU) is proposing a legislative framework designed to facilitate the free flow of non-personal data across borders within the EU’s internal market.

Objective of the Data Act

The goal of the Data Act is to remove barriers to data sharing and usage across the EU by means of various provisions aiming at:

  • Facilitating the¬†sharing of data generated between companies (B2B) and with consumers (B2C), in particular by setting an obligation to make data generated by the use of connected objects and related services accessible, in return for fair and equitable compensation
  • Making it easier to change data processing service providers (cloud switching) by regulating the contractual relations between service providers and their customers, and by gradually cutting the costs to customers of changing cloud services
  • Reinforcing the data portability obligation for companies that generate data via their connected products, and consequently strengthen the general and sectoral requirement for interoperability between data processing services
  • Putting in place new safeguards against unlawful access by third-country governments to non-personal data contained in the cloud

Benefit and challenges

The Data Act represents a pivotal step toward reshaping the landscape of the digital economy, both within the European Union and on a global scale. By facilitating the sharing of data across a wide spectrum of industries, it aims to unlock a wealth of opportunities for innovation, economic growth, and the empowerment of users. This legislation is designed to democratize access to data, providing smaller entities and individuals the same opportunities that large corporations have long enjoyed. As a result, it is expected to stimulate competitiveness, enhance consumer choice, and drive the development of new, innovative technologies and services that could transform markets.

However, the journey toward these ambitious goals is not without its challenges. Implementing the Data Act will require businesses to navigate a complex landscape of compliance and regulatory requirements, which could pose significant burdens, particularly for small and medium-sized enterprises with limited resources. The technical demands of ensuring interoperability and secure data sharing across diverse platforms and jurisdictions present another significant hurdle, requiring substantial investment in infrastructure and expertise. Moreover, the Act raises critical concerns around privacy and data security, challenging stakeholders to balance the free flow of data with the imperative to protect personal information and ensure robust cybersecurity measures. Intellectual property rights also emerge as a contentious issue, as businesses grapple with the sharing of data without compromising on proprietary insights or competitive advantages.

In essence, the Data Act holds the promise of a more open, competitive, and innovative digital economy, offering numerous benefits that could ripple through societies and economies around the globe. Yet, realizing this vision will require a concerted effort to address the substantial challenges it presents, balancing the drive for data openness with the imperatives of privacy, security, and fair competition. The path forward will necessitate a collaborative and adaptive approach, ensuring that the digital future we build is inclusive, sustainable, and reflective of shared values and goals.