Data Act changes the rules of the game in data sharing

Blogs January 12, 2023

Cars. Industrial robots. Wearable health devices. Censors connected to devices, machines or buildings. And many more. Manufacturers, users and add-on service providers of these and any other products will be affected by the upcoming Data Act, which will change the rules for data sharing throughout almost all industries. 

This completely new type of regulation is a key part of European Data Strategy aiming to generate increased usage of data as part of new services and businesses. Data Act will oblige sharing of data collected by a connected product to its user. Data must also be shared to a third party on request of the user. The regulation will additionally require manufacturers to share the collected data in exceptional situations to public bodies. Apart from data sharing obligations, Data Act aims to ease switching of cloud service providers. 

What changes after the Data Act becomes applicable?  

  • All data that a product collects, regardless of if data has been originated by active use or even being switched off, must be shared. 

  • The user, a natural or legal person, must have access to the data free of charge. 

  • The user can also request the data to be shared to a third party, e.g., a service company. 

  • Products must be designed to enable sharing of data. 

Not all data needs to be shared – and not in all cases

There will, however, be conditions on sharing. Only raw data will be covered by sharing obligations, as opposed to processed or aggregated data. Products that are primarily designed to display or play content, or to record and transmit content are exempted from the obligations. Trade secret protection must be taken into consideration when sharing the data. Third parties are not allowed to utilize the data to develop competing products. Additionally, sharing to third parties must take place under fair, reasonable and non-discriminatory conditions. Micro, small and medium sized companies are relieved from several obligations. 

This new regulation raises big questions on its grey zone:  

  •  What is raw data?  

  • Do sharing obligations cover for example data calculated by the embedded software in a censor?  

  • With whom the sharing agreements must be made when there are several users of one product or if a product is composed of many data-collecting devices?  

  • How much product design must be reshaped to enable direct access by the user?  

  • What happens to the business models based on device data? 

Prepare for changes in business models, product design and contractual relations

At its best, Data Act enables competition and creation of new services. There will be new potential when the device usage data will be combined in a new way or new market players will get access to the data. But especially, it will significantly impact many existing industries. Any product or device that is collecting usage data and is connected to network needs to be considered how data will be shared. Since data is often part of supplementary paid services, the business models might need to be reshaped. The regulation will also impact on the design of products. The design of the product must enable data sharing. This leads the designers to consider what data to collect and how to share. Sharing of data under Data Act will in most of the cases create a need to anticipate contractual relationships between manufacturers, users and third parties, including conditions that Data Act will impose. However, Data Act will not oblige to collect or share data that has not been collected before. 

Do you want to learn more about the new EU Data Act and how it affects all businesses related to connected devices and their data? 

Join us on January’s Fondia Academy: How to utilize IPR and Data in the Digital Economy, where Fondia’s experts will go through the obligations and effects of the EU data Act in a practical way and guide you on other related regulations. After which experts from Platform of Trust Oy share their best practices on how to implement data sharing requirements in practice. 

Read more about the Fondia Academy and register here!