The main goal of the Act is to provide a more equal footing in terms of access to data for both users and providers. The new regulations will ensure fairness by setting up rules regarding the use of data generated by the Internet of Things (IoT) devices. According to the Commission, applying the rules will make more data available and are expected to create €270 billion of additional GDP by 2028.
What does the Act mean for entrepreneurs?
In general, the new rules focus on Business-to-business (B2B) and Business-to-Government (B2G) data sharing. It brings clarity to these processes, thus harmonizing economic relations and preparing the way for the digital economyand green transition. The Data Act will apply to device manufacturers, providers of digital services, and other IoT-related products as well as public authorities in the EU.
And about the changes it brings:
- Creators are now obliged to provide consumers and businesses with access to data derived from IoT devices. Usually, the data is captured and held by a manufacturer or a designer and the rights of the product’s owner are unclear. Under the Act, the owner will be able to use the data for aftermarket purposes. For instance, a business owner may use data from an IoT manufacturing device to perform maintenance on their own instead of using the provider’s services.
- The Act prevents abuse of contractual imbalances in data sharing. This will help create more small-business-friendly data-sharing agreements. The Commission plans on releasing non-binding model contract terms that will further empower small enterprises.
- Neither data holders nor third parties will be allowed to prevent the user’s data sharing in any way. Only small companies will be excluded from these strict rules but only if they are independent of larger players.
- The Act obliges businesses to provide data to governmental bodies in certain situations. There are conditions for it, so the men-in-black will only lay their hands on your stuff in case of an emergency.
- It mandates cloud service providers to implement safeguard measures. It also enables cloud users to switch cloud providers without them charging additional fees.
- The content of databases generated by IoT is protected under the Act.
These changes will greatly impact the economy of the EU, helping small and medium-sized enterprises (SMEs) to find their way around data.
Apart from economical changes, like providing IoT users with data needed for maintenance, the Act will also improve security. For example, when you buy a regular product, you automatically acquire all parts of it. But when you buy a data-generating product, it is not clear who can do what with the information it gathers. Under the Act, both entrepreneurs and businesses will have more control over the data generated by smart devices.
Excluding middlemen, such as IoT product manufacturers help ecology too. If you possess the data from the device, such as error logs, you will know exactly what’s wrong with it. So you may choose to fix a device yourself or give it to a cheaper repair shop. Doing so will increase the device’s lifespan and contribute to sustainability goals.
Under the Data Act, SMEs in EU countries will have more possibilities to compete and innovate due to the broader access to data. It will be easier for them to switch providers, thus encouraging even small enterprises to participate in the digital economy.
What’s next?
The Council of the EU and the European Parliament still need to assess the Act and adopt all amendments. But when it’s done, the proposal will be in effectimmediately across all Member States. The European Commission calls for feedback on the Act. It will be open from May 28 to June 25, and if you are a private or public stakeholder, you may leave your ideas and remarks there.
