The Data Governance Act

Data is the oil of the digital age. This popular metaphor describes the economic benefit of data. But even if - to stay with the metaphor – currently there is an almost unmanageable amount of data sources: In order to create economic value, data must abe able to flow. In other words, data have to get from the sources to the users, who can create innovative added value with the data. The EU wants to eliminate this bottleneck with its data strategy.

The EU is committed to improving the legal framework for data use and creating a data sharing ecosystem. European businesses, public authorities and researchers should have access to large amounts of high-quality data. In doing so, the EU also wants to prevent the use of data from becoming concentrated among a few tech giants. To this end, the EU has adopted a new data law: With the Data Governance Act (DGA), approved by the Commission on 15 May 2022, the EU wants to harness the increasing amounts of data for the benefit of the economy and society. In this article, I examine whether this will succeed and what role data intermediaries will play in this.

Use data volumes sensibly

Increased use of public sector data is intended to drive innovation in the areas of artificial intelligence, medicine or mobility. The legislation also aims to ensure that citizens retain control over their data.
With the DGA, the EU wants to offer the possibility to further use public sector data. The DGA sets out some basic rules for making this public sector data available. This is based on the idea that protected data generated or collected with the help of public funds should also benefit society, and that this has so far been hampered primarily by a lack of uniform framework conditions.

The role of data intermediaries

Another important component of the DGA is the role of data intermediaries. Data is already traded as products on data markets. The EU Commission wants to further promote this exchange and expects that the more intensive use of corporate data will lead to macroeconomic benefits.

Currently, two main types of data intermediaries have developed: Data market places and industrial data platforms.

  • Data marketplaces: Market places bundle offers from data owners from different sectors and make them tradable. Market places such as Microsoft Azure Marketplace, Statista or Advaneo support the initiation as well as the legal and technical use of data.

  • Data platforms: Here, the focus is on collaboration between companies through the shared use of data. Participants enter data into a pool and receive data from other participants in return. In addition, there are also offers of data rooms in which users can share their data specifically with others.

The benefits of the DGA

The new legal framework is intended to strengthen confidence in intermediaries. Whether the DGA is really suitable for this purpose cannot yet be assessed. The question is whether the low current use of data intermediaries is due to a lack of trust. If so, regulation could help to strengthen trust. Whether this will succeed is not certain. This is because the DGA relies on ex-post control and not on ex-ante approval.

In addition, the business model of data brokers is made more difficult by the law, and the compliance efforts increase the costs of the operators. And finally, regulation does not remove the other obstacles to data use, such as the technical hurdles or the still limited range of data sources. Only when the willingness of the public sector to open up their sources to third parties increases can the DGA unfold its benefits.

We advise companies on the drafting of contracts for the use of data and help them to identify and contractually regulate the relevant regulatory issues.

Michaela Witzel, LL.M. (Fordham University School of Law),
Fachanwältin für IT-Recht