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The EU Data Act - Free flow of machine data? | Hengeler Mueller News
Public Law, Regulatory

The EU Data Act - Free flow of machine data?

Until today, different views exist on how data can be characterized. A few years ago, the proposition was popular that data is the oil of the 21st century - a raw material whose owner can refine it through analytical tools and then exploit it. Today, many voices reject the ensuing implication that data is limited. Instead, advocates of a free flow of data are now multiplying. They see data as a public, non-exclusive good whose benefits are maximized through sharing.

Users' rights to access machine data

The EU's Data Act aims for such a free flow of data. The law covers data from connected devices and machines, as well as data generated by, for example, voice command of smart devices or other product-related services.

According to the commission's plans, manufacturers should design their products in such a way that users can easily access their machine-generated data. Users should be able to share the data with companies other than manufacturers and authorize those companies to access the data directly. Violations of these obligations would lead to heavy fines. The draft law refers here to the provisions of the General Data Protection Regulation, which provide for fines in maximum amounts of EUR 20 million or 4 percent of global turnover.

The obligations to share data are flanked by obligations on cloud providers to make it easier for their customers to switch providers and by powers for the EU Commission to standardize technical aspects of data sharing.

With the Data Act, the Commission wants to promote the development of data-driven business models and establish new service providers on the market. Users of connected devices and machines are to be offered a broader range of aftermarket and additional services, such as predictive maintenance services or intelligent spare parts management. For example, specialized service providers could access data from multiple machines from different customers and manufacturers, thereby improving their forecasting or other offerings based on a larger data set.

The free flow of machine data can indeed spur the development of innovative business models. But under the draft Data Act, the flow of data is to be stopped at precisely two key points.

Only weak access rights for manufacturers

First, the draft does not provide for an explicit legal right of manufacturers to access the data. This weakens the position of manufacturers vis-à-vis machine users, to whom the draft law grants such a right.

The Commission asserts that the Data Act is not intended to limit the ability of manufacturers to use the machine data. On closer inspection, however, doubts arise as to whether the draft actually provides sufficient protection for manufacturers. For example, the recitals of the Data Act and later Article 4 state that manufacturers should only be able to access machine data if they have contractually agreed to do so with users.

Contractual data access may prove to be a blunt sword for manufacturers. After all, not all users might be willing to grant manufacturers usage options, as the current discussion about the allocation of vehicle data shows. In addition, the Data Act subjects contractual restrictions on legal access rights to narrow limits. The rules can even be understood to mean that manufacturers may no longer prohibit users from having their machines serviced by third parties.

It is debatable whether the preferential treatment of users with regard to machine data is justified. In particular, the interests involved in machine data are not comparable to those involved in personal data. While personal data must be assigned to the respective person for reasons of fundamental rights, machine data are neither exclusively assigned to the user nor exclusively assigned to the manufacturer of a product. Rather, this data is generated by the interaction of the manufacturer and the user. Therefore, the manufacturer should have at least as strong access rights as the user.

Far-reaching exclusion of platforms

Second, the Data Act significantly restricts the possibility of data access by certain platforms. Machine users will not be allowed to authorize large platforms to retrieve machine data. It is true that the ban is to apply only to data to which users have access precisely because of the Data Act. The Commission also states in the recitals that platforms may continue to receive data on a different basis and that they should continue to be able to provide certain services. However, according to the Commission's logic, users' access to machine data is currently very limited. This is precisely why the Commission proposed the Data Act. The restriction of the access ban is therefore likely to leave platforms little room for alternative ways to access data.

The European Commission believes it is protecting the single market and reducing inefficiencies in this way. However, it must face the question of why it does not let machine users decide for themselves which company they want to make the data available to.

No promotion of the European data economy through bans

German and European industrial companies, as well as new players in the market, have built up their own digital platforms for business customers in recent years. As a result, the industry is moving away from being a manufacturer of conventional products to a provider of digitally supported solutions.

However, the success of these business models does not only depend on machine data flowing freely. It also requires that users are free to decide with whom they share data and that manufacturers are given strong access rights.

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