Agreement reached on the European Data Act

Why should I read this?

On 28 June 2023, an agreement was reached between the European Parliament and the Council of the EU on the European Data Act (EDA).

The proposed law is designed to bring about a competitive data market and to make data more accessible.

What should I do?

The EDA was proposed in February 2022 by the European Commission, arising due to various issues and confusion around, amongst other things, use and access of data generated by connected devices and a limited ability to switch between cloud service providers in the EU. The EDA seeks to boost the EU’s data economy, aiming to facilitate data sharing and use, build a competitive and reliable data cloud market and giving consumers the right to switch between different cloud data service providers.

The EDA will apply to manufacturers of devices, digital service providers, companies that produce connected devices and public authorities in the EU.

Businesses should review their products, data processes and policies to ensure compliance. Strong security measures will need to be implemented by businesses to protect data from unauthorised access, use and disclosure. Businesses that are likely to receive data sharing requests will need to think carefully about the need to protect their trade secrets. Notably, the agreement ensures the protection of trade secrets and intellectual property rights, with safeguards in place to prevent abusive behaviours by data holders.

What else do I need to know about the European Data Act?

The EDA will now need to be formally adopted. A 20-month transition period applies (it will apply 20 months after its entry into force (expected to be by mid-2025)).

It promotes data sharing by introducing:

• measures allowing users of connected devices (including IoT devices like cars or other smart devices) to access data generated by these devices and to share data with third parties
• measures regulating contractual terms on data sharing in contracts to protect EU companies from unfair agreements
• new rules to give customers the freedom to switch between different cloud services
• measures to promote development of interoperability standards for data sharing and data processing
• ways in which public sector bodies can access and use private sector data including during public emergencies and in relation to climate change

Specific recent amendments include:

• data holders will have the right to refuse data access if disclosing trade secrets would lead to serious and irreparable economic losses or if there are specific safety requirements that could be undermined by data sharing
• data processed through complex proprietary algorithms were excluded from the scope
• limiting applicability of the EDA to data recipients and third parties within the EU

Further reading:

New EU Data Act: European Commission proposes measures for fair and innovative data economy

Updata edition 15

For more information about the European Data Act, please get in touch with any of the contacts listed below.