SMEs call on the EU to unleash innovation: protecting trade secrets is no excuse to water down the Data Act

  • Big Tech and industrial incumbents are lobbying the EU Council and Parliament to lock in consumers and businesses in their closed-off data environments

  • By amending the Data Act proposed by the Commission, the lobbies use over-claims of trade secrets to prevent access to data by SME innovators and stifle competition

  • Access to data in the after-sales markets as proposed by the Commission’s Data Act opens market competition triggering innovation by SMEs and independent companies

The Data Act is a fundamental piece of legislation within the European Data Strategy which sets forth rules to allow users of connected devices to gain access to the data they generate.

By having access to the data they produce, consumers and businesses would not be locked-in by the manufacturers  in the after-sales market. Any independent company could offer innovative services to the user of a machine or a device. In a competitive after-sales market, data driven innovation services would make products last longer and be more sustainable, improve safety by making maintenance and reparation more efficient, lower costs for consumers.

While the trilogue negotiations among the EU´s co-legislators are ongoing, there is a risk that data holders, such as Big Tech and incumbent companies, are given means to obstruct data sharing. Therefore, the upcoming EU rules on data-sharing could end up having only little added value.

The European DIGITAL SME Alliance considers that EU decision makers should not lose sight of the core purpose of the Data Act, which is to ensure that data users – businesses and consumers – can benefit from the data economy.

Digital SMEs stand close to the essence of the Data Act, because it gives SMEs the right to use the data they produce. Business-to-Business (B2B) data sharing enables the development of data-driven innovative services contributing to the digital and green transitions. This is not only important for SMEs’ competitiveness, but it is essential for innovation itself.

As the trilogue process continues, the issue of how to protect commercially sensitive information when sharing data with another company remains a sensitive point. Big tech and incumbent companies have been lobbying the EU institutions since February by signing several letters using the trade secrets issue as an excuse to undermine the Data Act. Trade secrets are a crucial component to businesses’ competitive advantage. However, decision-makers must not allow data holders to exploit trade secrets and abuse such safeguards to avoid sharing access to co-generated data and undermine the aims of the Data Act.

Safeguard mechanisms must be the exception, not the rule, and therefore it is important that it becomes impossible for data holders to unilaterally reject data access requests. Instead, the co-legislators should opt for confidentiality obligations that safeguard the disclosure of data. Such an approach will create the incentive for manufacturers to code the collections of data in ways that raw data does not reveal any inferred information and does not end up disclosing any trade secrets.

Maximising the opportunities from enabling access to data to SMEs in the secondary data markets means opening the door to innovation and making Europe a Digitally Sovereign continent.

Data is key to disclose bottom-up digital innovation. DIGITAL SME calls for retaining the essence of the Data Act to help realising the data economy in Europe and the innovative power of SMEs, which represent 99% of the Single Market. To this end, it is essential that innovation through data market solutions is promoted by ensuring fairness and access to data through the Data Act.