As the Data Act becomes applicable, what do you need to know?

The EU’s flagship Data Act starts to apply today (12 September), marking a new phase for data sharing in the EU. The Data Act, an EU regulation (2023/2854), promises to enhance the EU’s data economy and facilitate data-driven innovation by increasing the availability and reuse of data being generated by consumers and businesses. Its wide-ranging provisions also aim to increase fairness and allocate value between players in the data economy. 

Key features of the Data Act

The Act applies to both personal and non-personal data and includes requirements in relation to: 

• Internet of things (IoT) data sharing: manufacturers of IoT connected products, such as smart watches, connected cars and industrial machinery, and suppliers of connected services, must enable product users (businesses or consumers) to access their data and share it with third parties on request and free of charge, including by ensuring product design allows this.
• Unfair contractual terms in a business context: new rules and restrictions on contractual terms relating to data which aim to avoid unfair terms being imposed on businesses, particularly SMEs, by stronger market players. 
• Government access to private sector data: Governments can access private data where there is exceptional need such as in a public emergency, subject to restrictions. 
• Switching between data processing services: the Act aims to enable ‘free, fast and fluid’ customer switching between cloud service providers, including through introducing new interoperability requirements and by curtailing switching charges.

The majority of the Data Act’s provisions apply from today, with certain aspects of the regime on longer lead times (for example, the obligation relating to data-related product design takes effect this time next year).

The Data Act also includes provisions safeguarding non-personal data from unlawful third country government access and facilitating interoperability of data services to allow data to flow between Common European Data Spaces. 

We will be looking at each of these areas of the Data Act in more detail in a series of upcoming blogs. For more information in the meantime, please see our EU Data Act at a glance flyer.

Data sharing in focus 

While the Data Act will have significant impact on certain businesses within its scope, particularly those developing or using internet connected products or related services, it is one of a number of initiatives across the UK and EU which impact data sharing: 

EU data strategy 

The Data Act is a key pillar of the EU’s data strategy, that aims to create a single market for data that will ensure Europe’s global competitiveness. The other key pillar of the strategy is the Data Governance Act that started to apply nearly two years ago (on 24 September 2023). It facilitates voluntary data sharing of public and protected data sets, including through the establishment of data intermediaries.  

Digital Markets Act 

The Data Act is not the only piece of new EU legislation to introduce data sharing obligations. While it places obligations on manufacturers and service providers in relation to IoT data, the Digital Markets Act  requires large digital platforms (so-called gatekeepers) to provide users with real-time access to the data they generate through using the digital platform. Users can also share that data with third parties. This is with a view to supporting the ability of consumers and business users to switch between online service providers, promoting fair competition. 

UK smart data schemes

In the UK, the new Data (Use and Access) Act has introduced the legislative underpinning for the development of sector specific ‘smart’ data sharing schemes in sectors across the economy.  The government has estimated this will increase UK GDP by over £30bn a year (see this blog). While the detail of such schemes remains to be developed (and will likely vary between sectors), they each promise to allow consumers to access their data (personal and non-personal) and share it with alternative providers. The front running new UK smart data scheme is Open Finance, which promises to facilitate data sharing in relation to non-banking financial products, such as savings, investments, pensions and insurance (discussed here).