Data, the “new oil”, is critical for the conception of digital products and services and an important drive for technological innovation and revolution, part of which is the development and supply of AI-driven technologies and services. However, in the words of the European Commission: “Most data are unused […], or its value is concentrated in the hands of relatively few large companies. Low trust, conflicting economic incentives and technological obstacles impede the full realisation of the potential of data-driven innovation.”

Motivated by the above, on 28 June 2023, the European Parliament and the Council of the EU reached a political agreement on the European Data Act (the “Data Act”), proposed by the European Commission in February 2022. The Data Act seeks to remove the barriers to data-driven innovation by laying down harmonised rules concerning data generated by the use of a product or a related service.

The Data Act will apply to products that obtain, generate or collect data concerning their use or environment, being able to communicate data via a publicly available electronic communications service, and the primary function of which is not the storing and processing of data. The Data Act will apply also to related services, which represent digital services, including software, incorporated in or inter-connected with a product in such a way that their absence would prevent the product from performing one of its functions.

The Data Act shall regulate the provision of artificial intelligence (AI) services (which would qualify as “related services” under the Data Act), as well as the manufacture of AI-driven products and technologies, such as Internet of things accompanied by an AI software (which would qualify as “products” under the Data Act). Thus, the provisions of the Data Act will apply to manufacturers of AI-driven products and suppliers of AI services, placed on the EU market, as well as the users of such products or services.

Among others, in a nutshell, AI service providers and manufacturers of AI-driven products and technologies will have to comply with the following Data Act provisions:

       • the measures on rebalancing negotiation power for SMEs in the conclusion of data sharing contracts;

       • the measures on access of users of connected devices to data, generated by these devices;

       • the rules establishing the ability of customers to switch between different cloud data-processing service providers in an effective manner and to put in place unlawful data transfer safeguards.

What comes next? The European Parliament and the Council of the EU are now expected to formally approve the reached agreement. Following the adoption of the Data Act, the latter will enter into force on the 20th day after its publication in the Official Journal and will become applicable 20 months after its entry into force.

The authors are DGKV's Partner Violetta Kunze and Associate Anita Dangova.