EU Data Act: a new era for the data economy

The planned EU Data Act will kickstart a new era for the European data economy.

The EU Data Act aims to drive the growth of the European data economy.
Image: © Mixmagic / Adobe Stock

What is the EU Data Act?

With its Data Act, the EU aims to give the economy wider access to data as a resource, while at the same time defining new legal regulations and obligations that will significantly change how data is exchanged and used.

Objectives of the EU Data Act

80 percent of industrial data currently remains unused.

That’s according to figures published by the European Commission, which aims to improve the situation through its EU Data Act. After all, companies are wasting a major part of one of the most important resources of our time: data. In pursuit of the following three main goals, the EU wants to equip Europe for the digital era:

  • Boosting the data economy
  • Driving digitalization
  • Shifting from data monopolies to data exchange

The EU hopes that the new data exchange dimensions will give rise to a strong economic upswing, with the Commission expecting gross domestic product to increase by 270 billion euros. By improving access to data for businesses and consumers, the aim is also to expand the EU’s digital infrastructure, fuel innovation, and establish a new data economy that complies with the high data protection standards of the GDPR.

So that all companies reap the benefits of this progress, the draft legislation intends to dilute data monopolies by promoting data exchange. That will give both small and medium-sized enterprises access to essential data that has already been collected in various places, thus enabling them to optimize their business models. The aim is to make fairness and competition a pillar of the European data economy.

EU Data Act: implications for businesses

The Data Act proposed by the EU presents a range of new challenges to businesses, particularly technology manufacturers, since products will need to be built so that the data generated during their use is easy to access as a standard element. This data includes all associated information as well as audio and image recordings. Especially with regard to the Internet of Things (IoT), the Data Act could have far-reaching effects. Users would have extensive access to the wealth of data collected by household appliances, health products such as fitness watches, networked cars, and more. Manufacturers would also be able to use the data and pass it on to third parties as long as they thoroughly inform users and obtain their consent beforehand. How that exactly ties in with the GDPR would depend on the specific application.

Expert tip: To process and share the data, technical solutions are required. “Companies should incorporate the obligations set out in the EU Data Act early on in the development of their products,” advises Dennis Kurpierz. Kurpierz, the COO of legal tech company caralegal, has delved into the EU Data Act and what it means for businesses. Although the Act hasn’t come into force yet, it already reveals the new course for European data policy.

Challenges presented by the EU Data Act

One major task that companies face as a result of the EU Data Act is the portability of collected data. The draft legislation stipulates that users should be able to quickly switch between service providers and take their data with them. The business world has already criticized that idea, arguing that demigrating data is complex and can take significantly longer than the proposed Act provides for. The statutory timeframe proposed for this is therefore still being discussed.

Another point of contention is how to reconcile the protection of business secrets with the obligation to share data. Consumer advocates, business representatives, and data protection experts are not on the same page in their criticism of the Act when it comes to whether too little or too much data will (have to) be shared. In practice, however, many worry that the EU Data Act could cement the divisive concept of data ownership, where manufacturers would have the final say.

Fresh boost for the data economy thanks to the EU Data Act

As part of its digital strategy, the European Union hopes that its Data Act will give the data economy new momentum and strengthen the position of European businesses on the global market. The planned regulations could significantly change how data is handled, meaning that companies would have to rethink their structures for collecting, storing, and forwarding data. They should therefore be prepared for a period of transition, the extent of which will depend on the final negotiations and amendments to the legislative text.