By managing data, companies can, among other things, analyze and improve their processes based on data. For example, products, services and business models can be further developed by analyzing usage and demand data and thus identifying potential for improvement. The advantages of data sharing from an economic perspective appear clear. However, there are still many companies in Germany that do not manage their data.

In the fall of 2021, the German Economic Institute conducted a survey of German companies from the industrial and industry-related service provider sectors to determine the extent to which companies themselves perceive the benefits and manage data together accordingly. According to the survey, 71% of companies in Germany do not meet the requirements to be able to manage their data efficiently. Around three quarters of companies state that they do not manage data jointly with other companies. The remaining quarter are predominantly in the role of data recipients rather than data providers. According to the study, the main reasons for this are the lack of economic incentives and legal barriers to providing or sharing data with others.  

What exactly does the Data Act regulate?

On February 23, 2022, the European Commission (EU Commission) published the first proposal for a Data Act, which is officially referred to as the Data Act. The draft addresses both industrial data and personal data. The joint position paper of the Professional Association of Data Protection Officers in Germany (BvD), the DIHK - Association of German Chambers of Industry and Commerce and the Data Protection Foundation sets out the objectives of the Data Act:  

“The Data Act is intended to create a legal framework for the use and sharing of data that applies to the entire EU. The EU Commission's aim with the draft is to improve the exchange and use of data for all players in the economic value chain or to make it possible in the first place.” 

The Data Act is intended to facilitate access to and use of data, while at the same time continuing to offer incentives to invest in the management of data. One of the aims is to ensure a fair distribution of data value creation between the players in the data economy. An important objective of the Data Act is therefore also to ensure the innovation and competitiveness of EU companies. Consumers should also be given more control over their data and be able to make sovereign decisions about who, what and how they make their data available to. In future, consumers will also be able to request that providers transfer their data to another platform that offers them better analysis options, for example.   
 

For whom is the draft Data Act relevant?

The draft Data Act is relevant for: 

• Product manufacturers and providers of related services marketed in the EU and the users of such products or services,
• data controllers who provide data to recipients in the EU,
• for data recipients in the EU to whom data is provided,
• public authorities and EU institutions, bodies, offices and agencies,
• providers of data processing services offering such services to customers in the EU.

Opportunities and challenges for companies

The shared use and exchange of data plays a crucial role, particularly between companies. The better use of data can generate innovative business models and make processes more efficient. The business models of many European companies are still based on the provision of traditional products. Increasingly, however, these products also produce (digital) data. The advantage of this data is that it can be analyzed and used. This opens up new opportunities - for processes in companies, but also for data-based goods and services. With the help of the Data Act, companies should be able to easily move their data from one cloud provider to another.  

This will make it easier for companies to adapt their services and products to the needs of their users. The protection of data and the (sensitive) information it contains, such as business secrets, personal data or information about upcoming price adjustments, is of great importance from a company's perspective.

Enabling more scope for data use

The Data Act is intended to regulate both the right of users to access and use user-generated data and the prohibition of unfair contractual clauses in standardized data licensing agreements. A user within the meaning of the Data Act is any natural or legal person who owns, leases or rents a product or receives a service. In future, companies will be obliged to grant these users access to the generated data. A ban on unfair contractual clauses in data access and data usage contracts would protect small and medium-sized enterprises (SMEs) and strengthen their negotiating position in data-driven value chains.

Trade secrets insufficiently taken into account to date

However, making data available also poses a number of challenges for small and medium-sized enterprises. In some SMEs, the necessary data logistics and the operational handling of rights and obligations under the Dara Act are not yet sufficiently established. It is also doubtful whether sufficient incentives can be set for the exchange and use of data. Complex contractual and technical requirements in particular can overburden SMEs. To ensure that companies do not lose their competitiveness, the Data Act should also take into account the protection of trade secrets. Despite the challenges, the draft Data Act is an attempt to regulate a complex, dynamic area with its opportunities and risks.