February 26, 2022 - 5 minutes read

Proposed EU Data Act and possible impact of the rules

By Francis Monyango

On February 23, the European Commission proposed new rules on who can use and access data generated in the EU across all economic sectors. These rules would be contained in the proposed Data Act. According to the press release, the proposal for the Data Act includes:

  • Measures to allow users of connected devices to gain access to data generated by them, which is often exclusively harvested by manufacturers; and to share such data with third parties to provide aftermarket or other data-driven innovative services. It maintains incentives for manufacturers to continue investing in high-quality data generation, by covering their transfer-related costs and excluding use of shared data in direct competition with their product.
  • Measures to rebalance negotiation power for SMEs by preventing abuse of contractual imbalances in data sharing contracts. The Data Act will shield them from unfair contractual terms imposed by a party with a significantly stronger bargaining position. The European Commission will also develop model contractual terms in order to help such companies to draft and negotiate fair data-sharing contracts.
  • Means for public sector bodies to access and use data held by the private sector that is necessary for exceptional circumstances, particularly in case of a public emergency, such as floods and wildfires, or to implement a legal mandate if data are not otherwise available. Data insights are needed to respond quickly and securely, while minimising the burden on businesses.
  • New rules allowing customers to effectively switch between different cloud data-processing services providers and putting in place safeguards against unlawful data transfer.  
  • In addition, the Data Act reviews certain aspects of the Database Directive, which was created in the 1990s to protect investments in the structured presentation of data. Notably, it clarifies that databases containing data from Internet-of-Things (IoT) devices and objects should not be subject to separate legal protection. This will ensure they can be accessed and used.
  • Consumers and businesses will be able to access their device’s data and use it for aftermarket and value-added services, like predictive maintenance. By having more information, consumers and users such as farmers, airlines or construction companies will be in a position to make better decisions such as buying higher quality or more sustainable products and services, contributing to the Green Deal objectives.
  • Business and industrial players will have more data available and benefit from a competitive data market. Aftermarket service providers will be able to offer more personalised services, and compete on an equal footing with comparable services offered by manufacturers, while data can be combined to develop entirely new digital services as well.

While the Data Governance Act, presented in November 2020 and agreed by co-legislators in November 2021, creates the processes and structures to facilitate data sharing by companies, individuals and the public sector, the Data Act clarifies who can create value from data and under which conditions.

Impact

Europe has been intentional on being a trendsetter in the data governance field and this can be seen from the impact of the GDPR in the world. Many countries outside Europe are likely to enact laws similar to the Data Act and that will create an international standard that many technology companies comply with. With responsible technology picking up momentum all over the world, the Data Act and its impact should be in every technology company’s radar.

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