Regulating data sharing: the Data act and key takeaways from EU study workshop.
In the past few years, the European Union has dedicated a lot of effort to create a solid framework for digital trust, removing digital borders, encouraging trade in data and facilitating better security within the EU single market. As part of the European strategy on data, the European Commission is working on a Data Act to foster data access and interoperability.
The Data Act seeks to encourage business-to-business (B2B) data sharing to facilitate access to and use of data to realise the full potential of EU’s data economy. The Data Act aims to address the following problems currently limiting B2B data sharing:
- Lack of economic incentives for data holders to share
- Lack of trust between businesses that contractual terms will be honoured
- Imbalances in negotiating power
- Fear of misappropriation by third parties
- Lack of legal clarity on who can do what with data
In view of the forthcoming legislative piece, the European Commission’s DG JUST and DG CNECT are conducting a Study on model contract terms and fairness control in data sharing in data intensive industry sectors. The study is intended to feed into the Commission’s impact assessment activities linked to the Data Act.
More specifically, the Study aims at assessing whether the EU should take further action to stimulate and facilitate data sharing in B2B relations. Among the potential policy interventions considered in the Study to facilitate B2B Data sharing and ensure fairness in this context, three policy interventions have been proposed – (i) non-regulatory intervention through model contract clauses, (ii) regulatory intervention through legislative fairness controls and (iii) regulatory intervention through legislative definition of access modalities in circumstances where data sharing is already mandatory.
The results from the study were validated in an interactive workshop with representatives of associations, companies, and SMEs on July 8th. The workshop was divided in three sessions allowing all participants to voice their views on impacts, challenges, and possible legislation in the data sharing field.
In the first session, the discussion focused on the issues related to data sharing, their causes and impacts. Participants highlighted the lack of voluntary data sharing practices in the Business-to-Business (B2B) context, pairing it with a lack of incentives tools and practical knowledge.
Contractual freedom means that the data holder and the data receiver are free to determine the terms of their data sharing contract. But attendants remarked that, in practice, there may be limited margin for negotiation, or one party may be significantly more powerful and impose terms which are unfair to the other party.
The second session centred the discussion on the status of current challenges around data sharing in the EU. During the dialogue, it emerged that the most important element contributing to making a data sharing agreement ‘fair’ is the ability for both parties to negotiate the contractual terms. Indeed, other factors are also seen as providing fairness, such as (i) transparency on terms, (ii) clear liabilities, (iii) possibility of challenging the terms in front of a neutral third party, (iv) insurances against the use of data against one’s interest.
Discussions can become particularly complex in situations where data is ‘co-generated’, meaning that the data was jointly created by one or more parties other than the data holder. Amongst the participants there seemed to be a large agreement on the necessity for this business model to be subject to more specific rules.
In the participants’ opinion, it is presently not sufficiently easy to determine which data is available to them, however, it was a generalized feeling that, if data would become available on fair terms, this would allow products and services creation and innovation.
Finally, in the third session, attendees discussed policy objectives and potential policy interventions. Remarkably, all participants to the workshop indicated that a new policy intervention in this field would be justified. However, the majority would also prefer this to be of non-regulatory nature.
On the topic of legislation, the participants favoured a sector specific approach. Agreeing on the benefits of model contractual terms, as well as, on those of legislation defining data access modalities and fairness controls, as long as it is granular and flexible enough to be sector specific.
As potential future new legislation for data sharing in B2B is likely to have a significant impact on the industry, it is important to further validate the findings from the Study and the Impact Assessment activities with as many stakeholders as possible, in particular representatives of SMEs. To contribute to the validation of results, the Study Team has prepared a questionnaire to be filled out (deadline July 30th) by SMEs and other stakeholders. Find the link to the questionnaire here.