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Data Act: EU strikes deal for fair access to data, empowering individuals and businesses in digital transformation

On 27 June 2023 the European Council and the European Parliament reached a provisional agreement on a new regulation called the Data Act, which aims to ensure fair access to and use of data within the EU. The agreement represents a significant step towards making the EU a leader in the data-driven society. The Data Act proposes new rules regarding access to and use of data generated across all economic sectors in the EU. Its main objectives are to ensure fairness in the allocation of value from data, stimulate a competitive data market, foster data-driven innovation, and increase data accessibility for all. The legislation also aims to facilitate the switching of data processing service providers, protect against unlawful data transfer by cloud service providers, and establish interoperability standards for data reuse between sectors.

One of the key aspects of the Data Act is giving individuals and businesses more control over their data through a reinforced portability right. This means that they will be able to easily copy or transfer data generated by smart objects, machines, and devices across different services. The legislation aims to empower consumers and companies by allowing them to have a say in how their connected products' data is used. The agreement covers several main elements, including clarifying the scope of the legislation to include data generated by connected devices and focusing on the functionalities of the data collected by Internet of Things (IoT) products. It also includes measures to prevent abusive contractual terms in data-sharing contracts, guidelines for reasonable compensation for businesses making data available, and mechanisms for dispute settlement.

As a result of the negotiations, the agreement intends to provide protection for trade secrets and intellectual property rights and provides safeguards against potential abusive behaviour by data holders. It also grants public sector bodies the ability to access and use private sector data in exceptional circumstances, such as during public emergencies or to fulfil tasks in the public interest.

The Data Act will benefit customers by allowing them to switch between data-processing service providers more effectively and by implementing safeguards against unlawful data transfers. The legislation also clarifies how it interacts with existing horizontal and sectoral legislation, such as the Data Governance Act and the General Data Protection Regulation (GDPR). In practical terms, the Data Act will streamline the transfer of data between service providers, creating a more accessible data economy that encourages increased participation from various actors, including small and medium-sized enterprises (SMEs). This will enable aftermarket service providers to enhance their services, foster innovation, and compete on an equal level with manufacturers' offerings.

The provisional agreement now needs to be endorsed by the Council and the European Parliament and undergo legal-linguistic revision before being adopted. The Spanish presidency of the Council aims to submit the text to member states' representatives for endorsement as soon as possible.

The Data Act is the second major legislative initiative following the adoption of the Data Governance Act in 2022. While the Data Governance Act focuses on facilitating data-sharing processes and structures, the Data Act clarifies who can create value from data and under what conditions. Once the Data Act comes into force, it shall unlock the economic and societal potential of data and technologies.