The data act: Utilizing Europe’s industrial data

The European Institutions are well aware that today data is a key pillar of the European digital economy and data collaboration within, and across Europe’s industries, public administrations and consumers will be key to future innovation and economic growth.

The Data Governance Act was one of the first measures announced in the European strategy for data to overcome that data re-use is hampered by low trust in data-sharing and technological obstacles. Its objective: to facilitate voluntary data sharing across the EU and between sectors by strengthening mechanisms that increase data availability and foster trust in one of the main novelties of the proposal, “data intermediaries”.

However, the Data Governance Act is part of a wider European Data Strategy, and the Regulation on Harmonised Rules on Fair Access to and Use of Data (Data Act) is the remaining piece that completes the EUs ambitious step towards the Data Economy. Indeed the Regulation will govern access to data in business-to-business (B2B) relationships with a special focus on addressing issues related to usage rights of co-generated IoT data, it will establish when businesses are required to share their data with public bodies (B2G) and will improve switching between data processing services.

The Data Act has the potential to be an absolute gamechanger if it can create a data-agile ecosystem that enables easy access to an almost infinite amount of high-quality industrial data and consequently boosting the sectors competitiveness and the EUs economic growth.

This is of paramount importance for the EUs competitiveness at a time where data will mainly come from connected things and anything that can be connected will, in the near future, be connected.

Accordingly, data, and especially industrial data, is a growing competitive asset for Europe. A competitive advantage that, in the current economic context and under harsh international competition, Europe must optimize. An asset that we cannot afford not to optimize. Let’s not lose sight of what our international competitors are doing, the US, for example, not only exhibits far more dynamic industrial investment, it is developing policies, such as the Inflation Reduction Act that will further increase this advantage.

And here is where the biggest potential of the Data Act lays for the EU. This Regulation can contribute to optimizing existing business models and processes, boost the development of new ones, and by doing so creating new value, structures and partner networks.

The fundamental postulate of the Regulation is that the user must have access to the data produced by the connected products and related services, and consequently be able to share it. The complexity is how to do so while avoiding the creation of new considerable additional costs and legal uncertainties for stakeholders. In other words, circumventing a scenario where the development of and functioning data market might be hampered.

One of the main difficulties of this task is due to the fact that the Data Act will be a horizontal regulation, that might affect business differently depending on the products they manufacture, the services that rely on these products or their role in the aftermarket.

Nevertheless, I firmly believe that it is an effort that must be undertaken at European level. It is necessary to avoid the market fragmentation which could emerge from individual national legislations, while simultaneously removing barriers to a well-functioning internal market for data.

I am of the opinion that the Commission proposal is the step we needed to take in the right direction; however, as the European Parliaments rapporteur I have identified a number of important shortcomings that need to be solved. Being the first question we must answer is what IoT Data falls under the scope of the obligations of the Data Act and consequently be made available to the user of a connected product?

In my view, in scope are data in raw form as well as prepared data. That is data cleaned and transformed prior to processing and analysis. In other words, data that is pre-processed for the purpose of making it useable without however reaching the stage of deriving or inferring insights that would put in risk IP rights or trade secrets.

Likewise, the Commission proposal seems to have a simple approach to, sometimes, complicated value chains of products, data and services, which can, in occasions, produce an array of dependencies and multiple data holders. For this reason further clarification is needed on how this regulation applies to the different actors, in particular on who would be responsible for providing data access to the user, and potentially also to the data recipient.

Other central topics are: the protection of trade secrets; shielding SMEs from unilateral and unfair contractual terms in data sharing agreements; the conditions that must apply in order for public authorities to request data from private businesses; the setting of interoperability and portability standards; and international transfers of data, amongst other..

To finalise, I must insist in the fact that the Data Act is a horizontal legislation that will be directly applicable throughout the entire European Union and will set the principles of sectorial legislation to come.

This is a critical premise that we must not forget. Whatever concepts and definitions that at the end are set in the Regulation these need to be sufficiently flexible to be used in all sectors, but at the same time they need to be clear enough that they do not hamper legal certainty to all stakeholders.

Indeed, the colegislators have their work cut out for them. The point of departure is however very promising, that is: the clear awareness of the importance of this dossier for Europe’s future competitiveness.