Timing of new EU data rules and plan to cut red tape baffles tech sector

Tech companies are confused about the timing of upcoming EU rules that aim to monetise data along with a new attempt to simplify rules affecting the sector, industry representatives have told Euronews.

Most provisions of a new EU Data Act will come into effect on 12 September, just three months before the European Commission presents its digital simplification package: an effort to cut red tape and pull back on certain reporting obligations.

In 2022, the European Commission proposed the new law to make sure that data created using smart devices - like connected cars or smart home equipment - is shared fairly. The EU wants to make sure the people using such devices benefit as more and more machines create huge amounts of data.

Manufacturers of devices must design their products in a way that makes it easy for users to get and share their data under the Act. But there are some exceptions: if sharing data could reveal important business secrets, companies can temporarily stop the sharing.

In emergency situations like floods or cyberattacks, private companies may be required to share their data with government agencies to help manage the crisis.

Digital trade groups, however, say that uncertainty now surrounds the rules because of the simplification plans announced by EU Tech Commissioner Henna Virkkunen. The EU executive is currently gathering “insights on where current policies can be simplified or streamlined”.

In a statement to Euronews, the Business Software Alliance (BSA), a trade group which counts Amazon, Microsoft, Cisco and Oracle among its members, said that the timing of the simplification package “raises the risk that companies will need to comply with the full obligations of the Data Act, only to see them potentially revised shortly thereafter”.

Fewer than half of EU member states have designated or legally empowered national authorities responsible for implementing the new Data Act, according to BDA, which is now calling for the application of the law to be deferred to ensure legal clarity "until a coherent and effective implementation is found”.

This was echoed by trade group Computer & Communications Industry Association (CCIA). 

CCIA Europe’s Head of Policy and Deputy Head of Office, Alexandre Roure said “Reopening the Data Act now would only create more uncertainty, and that’s something companies can’t afford. Including the Data Act in the Commission’s upcoming digital simplification package would send mixed signals just as businesses are starting to adapt.” 

A spokesperson for the Commission said that “there is no link between the planned Digital Simplification Omnibus and the national measures needed to give practical effect to the Data Act.”

Rules in practice

Besides the simplification efforts, most companies “are still grappling with what the rules mean in practice,” said Roure. 

“Clear guidance is urgently needed, especially on thorny issues like protecting businesses’ trade secrets and how the Data Act interacts with the GDPR’s data protection framework,” he added.

BSA said also that “significant concerns persist among industry stakeholders.”

“One major issue is the uncertainty over whether companies can recover the full value of contracts when a business customer terminates a fixed-term agreement prematurely. Additionally, the Act’s aim to enforce interoperability across all cloud service providers may unintentionally hinder competition and innovation, potentially driving up costs for end users,” the statement added.

The Commission said that while the Data Act applies directly in all 27 member states from 12 September, it also includes provisions that require national implementation measures such as on penalties and enforcement.

Breaches of the Act can result in fines of up to €20 million or 4% of the company's total worldwide annual turnover, whichever is higher.

“The Commission is working closely with member states to support a timely and consistent implementation, including through the European Data Innovation Board where these national implementation measures will be discussed,” the spokesperson said.