The EU Data Act: how to prepare for the data economy

The EU Data Act highlights a growing need to share the data that powers every part of our lives – from consumer devices to healthcare. 

Bridging data divides is the strategic cornerstone of any flourishing data ecosystem. When we make data more accessible, it becomes more powerful – and brand-new value chains open up as a result. 

That, in part, is the thinking behind the fledgling European Data Act, which seeks to codify the exchange of data between devices, organisations, government bodies, and end users. But what exactly does that mean for each of those four very different parties? And how will things need to change to comply with an entirely new set of rules?  

Here’s everything you need to know… 

What is the EU Data Act? 

With the Data Act, the European Commission essentially wants to make a platform for sharing data more broadly. It wants to enable a legally stable environment in which to do this, enabling companies to exchange data more openly – and for customers to have more power over what happens to their data. 

With a focus on data generated by Internet of Things (IoT) devices, the EU Data Act has four main aims: 

1. Ensure fairness in the allocation of value from data among actors in the digital environment 
2. Stimulate a competitive data market 
3. Open opportunities for data-driven innovation 
4. Make data more accessible to all 

That last part is tricky. One aspect of data accessibility is the introduction of rules that facilitate seamless switching between cloud service providers (and other data processing services). This will remove commercial, technical, and contractual obstacles, giving consumers more flexibility when it comes to switching to alternative servive providers.  

But making data ‘available to all’ is a lofty aim, and it’s one that can’t be done without considering the challenges and risks alongside the opportunities. Get it right, though, and we can all benefit. 

‘When you democratise and connect varied data sources across industries, you can create entirely new products and build better customer experiences’. 

Right now, companies are ‘cooking their own soup’ and not really sharing much data between themselves or with their customers. Some forward-thinking companies and bodies are trying to structure their data and make it more consumable, but the EU is looking a step ahead; it’s trying to create a strong ecosystem across companies with more varied data sources. So that’s not just from your company, but also from ones in neighbouring industries. 

Link these data sources together and suddenly you can create entirely new products and build better customer experiences. It’s all about democratising and generating value from data by opening up access to it at every level. 

Fostering data-driven innovation 

The European Commission estimates that some 80% of industrial data remains unused – either because it isn’t optimised for sharing, or because companies struggle to see its inherent value. 

That’s a lot of potential for innovation being left on the table, which is exactly what the Data Act wants to change. It’s a legislative shift that will have a lasting impact on every kind of industry that dabbles in data (even tangentially) – standardising access and freeing it up to be put to work by almost anyone who can make use of it. 

In consumer technology, for example, the Data Act will make it possible for businesses and bodies outside a product’s manufacturer to make use of customer data – albeit with consumer consent. That’s an interesting proposition for the world of IoT, where data collected by a smart fridge, for example, may find untapped value in the hands of a neighbouring industry partner – or for the end consumer. 

In the tabs below, you can explore three examples of how the Data Act enables value creation from data. These examples are taken from the EU Data Act website (source).

In the financial sector, meanwhile, the Data Act’s initiatives will go a long way towards enabling the kind of ‘data marketplace’ that future banking services and open finance opportunities will hinge on.  

The European Banking Federation recently published a report endorsing the Data Act’s key principles, stating that it welcomes ‘the European Commission’s intention to address the challenge of lock-in effects for business customers of data processing providers’, and that ‘it’s the combination of data from different sectors which holds the greatest potential for delivering new services and experiences for customers’. 

‘Experiences’ here could mean making it easier for people to switch providers without losing their historical transactional data, or it could mean opening the door to entirely new, more personalised financial services that don’t yet exist.  

‘That’s a lot of potential for innovation being left on the table, which is exactly what the Data Act wants to change'. 

Likewise, in healthcare, the more data access is democratised, the easier it is to spot trends, diagnose illnesses, and track diseases. As the European trade association for the medical technology industry, MedTech Europe has already published its support for the Data Act as a means to ‘foster a data-sharing ecosystem that supports data-driven innovation whilst ensuring citizens’ rights’. 

But here, rules from the Data Act will need to work alongside those present in the already-stringent world of medical regulations and approvals. 

This is a sector that’s already heavily regulated. You can’t bring out anything considered a medical device without proving it’s incredibly safe, and that its intended use is being fulfilled. So it’s an industry that’s well versed in working with these kinds of regulations and guardrails. 

Other industries may not be so lucky. For any business that found GDPR to be more of a game-breaker than a game-changer, sweeping legislative changes around data – especially ones that challenge preconceived ideas of how data economies function – will seem like challenges, rather than opportunities.  

And that brings us to the key question at the heart of the EU Data Act as it stands: how do we get from here to there? 

How industry is responding to the Data Act  

Few regulatory changes ever come into effect without opposition. And, despite industry support for these legislative changes, the EU Data Act is also facing criticism.  

Even among its supporters, there are calls for further clarity around key issues like trade secrets, citizen rights, and data protection. MedTech’s mostly positive report, for instance, also states that it would ‘welcome more clarity on how such requirements would interact with the design of medical technologies, knowing existing sectoral legislation already addresses design characteristics of such devices’. 

Likewise, the European Banking Federation’s (EBF) report seeks ‘a [more] clearly defined scope for new obligations for data access from connected products and related services’. 

‘The EU Data Act will have a lasting impact on every kind of industry that dabbles in data – even tangentially'. 

Perhaps most notably, leaders at Siemens and software maker SAP have expressed concerns about the dangers of moving too fast with data-sharing changes in a market where businesses aren’t data ecosystem ready.  

The companies wrote in a joint statement: ‘It risks undermining European competitiveness by mandating data sharing – including core know-how and design data – with not only the user, but also third parties’. 

Elsewhere, though, the sentiment is more cautiously optimistic than antagonistic. Right now, businesses are mostly just observing what's happening, and are trying to map that back to what it means to them as manufacturers or service providers. But they’ve not yet started implementing governance structures that will implement what’s being described. 

The key to doing that successfully lies in readying themselves today to participate in the EU’s plan for a data economy tomorrow.  

Laying the foundation for data-driven innovation 

The Data Act may still be in its early stages, but it signposts a future in which business innovation is open, data-driven, and borderless.  

Crucially, that starts from the inside. The organisations that will thrive in this environment, and can reap the rewards of the innovation ecosystem model, will be the ones that focus on dismantling internal data silos and establishing a strategy and framework for turning both their own data and third-party data into value and actionable knowledge. 

‘Getting ready for data-empowered, borderless innovation requires your organisation to change – inwards and outwards’.

It's all about laying the foundation. With this kind of change, there's a lot you need to change around how you work in-house – like quality management systems, processes, people, data controls, and data governance.  

But once you’ve laid that foundation, you’re ideally positioned to bring new, innovative services to market, while ensuring fair and ethical practice, accessibility, safety, and – of course – compliance. 

Democratised knowledge is the foundation for tomorrow’s innovation ecosystems. Speak to us today about our our ISO-accredited strategists, scientists, and engineers can help you become a data-empowered organisation with the right data strategy and AI solutions.