Brussels vows to open up €270bn 'unused data market'

The European Commission is tackling the might of US tech giants head-on with new rules which it claims will ensure “fairness in the digital market, stimulate a competitive data sector, open opportunities for data-driven innovation and make data more accessible for all”.

Plans for the Data Act form part of the Commission’s aim to build a data-centric single market under the policy document, “the European strategy for data”. Published two days after Brexit was confirmed in February 2020, the strategy aims to make the EU a leader in the data-driven society.

At the time, the EU stated: “Currently, a small number of Big Tech firms hold a large part of the world’s data. This could reduce the incentives for data-driven businesses to emerge, grow and innovate in the EU today, but numerous opportunities lie ahead.”

With the volume of data constantly growing, from 33 zettabytes generated in 2018 to 175 zettabytes expected in 2025, the Data Act is designed to address the legal, economic and technical issues that Brussels claims lead to 80% of industrial data never being used.

The new rules will make more data available for reuse and the Commission insists the move will to create €270bn of additional GDP for EU companies by 2028; following Brexit, firms that only operate in the UK are unlikely to see many benefits.

The proposals include new measures to allow users of connected devices (Internet of Things) 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.

There are also 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 Commission will also develop model contractual terms in order to help such companies to draft and negotiate fair data-sharing contracts.

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 connected 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 the data of their device 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 in the EU will be in a position to take better decisions such as buying higher quality or more sustainable products and services, contributing to the Green Deal objectives.

Commission executive vice-president Margrethe Vestager, who is in charge of the Europe Fit for the Digital Age strategy, said: “We want to give consumers and companies even more control over what can be done with their data, clarifying who can access data and on what terms. This is a key Digital Principle that will contribute to creating a solid and fair data-driven economy and guide the digital transformation by 2030.”

Internal market commissioner Thierry Breton added: “Today is an important step in unlocking a wealth of industrial data in Europe, benefiting businesses, consumers, public services and society as a whole. So far, only a small part of industrial data is used and the potential for growth and innovation is enormous. The Data Act will ensure that industrial data is shared, stored and processed in full respect of European rules. It will form the cornerstone of a strong, innovative and sovereign European digital economy.”

Perhaps unsurprisingly the proposals have not gone down well with the BSA, the trade body which represents many US tech giants including Adobe, Microsoft, Salesforce and SAP.

Director general of EMEA policy Thomas Boué said: “We believe that organisations that hold data – that is, the customers that BSA member companies serve – should retain full control over whether they share or transfer data, to whom, and on what terms.

“Mandating organisations in the EU to share the data they own – or, equally, restricting them from sharing or transferring data to third countries – will not only prevent EU businesses from reaping the full benefits of the digital transition but will render them less able to innovate and compete effectively in global markets.

“BSA looks forward to working with policymakers to help grow Europe’s digital economy in responsible ways, including making it easier for organisations to share data voluntarily, dispelling myths around third-country government access to non-personal data, and ensuring that the new rules are consistent with EU trade commitments.”

However, privacy organisations have backed the move. Monique Goyens, director general of European consumer organisation BEUC, said: “The Data Act is an important piece of the jigsaw to make sure data can be accessed fairly across industries while giving users full power to decide what happens to the data they generate. Beyond providing a framework in which data gets accessed and shared, the EU’s Data Act must complement existing data protection, consumer, and competition rules.

“It is essential that consumers decide what happens to the data they generate, when they share it and with whom. Consumers should have a simple-to-exercise data portability right, which extends beyond personal data, so that they can for example take all their data from one service to another if they want to. The EU must also ensure that the Data Act does not end up reinforcing Big Tech data monopolies.”

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