EU adopts draft Data Act

Last month the EU released the Data Act, a piece of draft legislation which aims to expand the interoperability of industrial data. The text was adopted on Tuesday, March 14th, with 500 votes to 110. 

See the full proposal linked here.

As explained in the memorandum prefacing the legislation, currently, the “value [of data] is concentrated in the hands of relatively few large companies”; “by ensuring greater balance in the distribution of the value from data in step with the new wave of non-personal industrial data . . . there is enormous potential for boosting a sustainable data economy in Europe”. 

The Data Act is hugely welcome in MOW’s view. The ability of the large platforms to gather more user data than any other online services, whilst restricting others’ ability to collect the very same information, is central to their market power. Illustrative of this practice is the “sign-in with Apple/Google” notices Safari and Chrome users are presented with when surfing the web; users are encouraged to by-pass third-parties’ sign-in pages, and thus, disintermediate publishers and rival online services from accessing useful consumer data. 

The gatekeepers have, likewise, justified attacks on technologies underpinning more even data access, like third-party cookies, by contending that third-party data handling is inherently bad, in contrast to first-party processing – an entirely fallacious argument. 

As a consequence, the platforms have essentially built a data monopoly. This data monopoly facilitates their superior understanding of consumer needs, means and wants which has, importantly, allowed these companies to inflate the price of advertising online. This ultimately harms the consumer: the CMA, for instance, found in its 2020 market study into Online Platforms and Digital Advertising that the average UK household incurs roughly £500 in advertising spend annually.

The recognition that there is a harmful imbalance in the market for data and that promoting the interoperability of data is not at odds with user privacy, is hugely important. However, as the legislation stands, there are still points which MOW would seek to clarify and strengthen. 

The relevant provisions in the Data Act can be found under Article 5, titled ‘right to share data with third parties’. It is provided that ‘upon request by a user, or by a party acting on behalf of a user, the data holder shall make available the data generated by the use of a product or related service to a third party, without undue delay, free of charge to the user, of the same quality as is available to the data holder and, where applicable, continuously and in real-time.’

Whilst the latter half of the paragraph seems entirely apt, we would argue that the obligation to share data only coming into force upon the request of a user might in practice limit the positive effect of the Data Act.

The general public lacks understanding of how data interoperability benefits the web and more broadly, society, meanwhile, platforms have been very successful in persuading consumers that they should be the only trusted custodians of user data. There seems very little reason to believe that even if given the right to compel platforms into data sharing agreements, many consumers would elect to do so. 

Fundamentally, any law that depends on user consent can be used by those that have huge consumer interfaces (such as the major gatekeepers) to reinforce their market positions and dominance over the supply chain.

We would argue, instead, that for anonymised, non-sensitive categories of data, interoperability should be an automatic requirement.

We will be in touch with the Commission to further outline our views on this matter.