Data Act: towards a more accessible and innovative European data economy

  • The Data Act must protect SMEs from unfair contractual conditions in the context of Business-to-Business (B2B) data sharing

  • Business-to-Government (B2G) data sharing conditions should be clarified and compensations for SMEs must be envisaged

  • Promotion of fairness and accessibility in the data economy must be preserved as Data Act’s overarching objectives throughout the legislative process

This Op-Ed was written by Antonio Grasso, EU Policy Director at the European DIGITAL SME Alliance.

As the Industry and Research Committee (ITRE) in the European Parliament voted today on its Report on the Data Act and negotiations intensify in the Council of the EU, it is positive to see the European Parliament and the Swedish Presidency of the Council joining efforts to advance the decision-making procedure on this crucial file, particularly with regard to preserving the purpose of the Data Act Proposal in promoting fair data sharing and increased accessibility to the European data economy.

Among the key aspects of the Data Act Proposal, DIGITAL SME members have raised the issue that SMEs’ protection from unfair contractual conditions in the context of Business-to-Business (B2B) data sharing should be ensured and guaranteed. In this regard, in its Position Paper on the Data Act, DIGITAL SME welcomed the adoption of FRAND (fair, reasonable and non-discriminatory) conditions and contract terms in the Data Act Proposal. Following these principles, if an extension of the exemptions granted to micro and small-sized companies to all SMEs is not deemed as the way forward by the co-legislators, a compensation to medium-sized companies captured by data sharing obligations towards public entities should be foreseen.

Moreover, the Data Act lays down the development of model contractual terms that will support SMEs in negotiating contracts related to B2B data sharing. The Proposal also provides a fairness test of general application (Article 13) to prevent the exploitation of contractual terms concerning the access and use of data and the ensuing liability which are unilaterally imposed on SMEs, shall not be binding.

What should be clarified is the relationship between the FRAND principles laid out in Article 8 and the fairness test in Article 13. With respect to the fairness test in Article 13, the wording used leaves room for interpretation as it refers to ´´gross deviation from good commercial practice or terms that are contrary to good faith”. This formulation would risk leaving SMEs unprotected when potentially facing a negotiation of unfair contractual terms.

As amendments on further flexibility in contractual negotiations to the Data Act Proposal are being proposed, the flexibility in the terms of contracts for B2B data sharing and processing services could end up favouring larger players in the market, yielding considerable negotiating power. It is crucial that the legislators pursue fairer and more balanced negotiations conditions of data sharing contracts to facilitate cloud switching among data processing services and foster an open data economy.

Furthermore, the scope of the conditions for business-to-government (B2G) data requests should be clarified. Through the co-legislative process, the narrowing down of the scope of what constitutes an ‘exceptional need’ for governments, as laid down in Article 15, is a step in the right direction to avoid additional burdens on European SMEs. However, it is also important that governments’ requests in gaining access to privately held data should come with fair compensation for small businesses.

Another key aspect that should be maintained in the Data Act is the need to protect non-personal data (such as data generated via machines and smart devices) held within the Union in line with the provisions included in Article 27.  This article mandates cloud services providers to prevent transfer of or deny access to non-personal data held in the EU where such a transfer or access would not comply with EU law. A potential weakening of the provisions under this article would not be beneficial to European-made businesses, and especially SMEs, as their data are mostly stored in Europe and are not likely to be subject to international data transfers.

Taking into account the above issues at stake, it is essential that EU institutions continue to back the promotion of fairness, accessibility and innovation in the European data economy in the course of the ongoing co-legislative procedure.

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