The European Commission’s take on a European Data Economy

Authors: Dr. Andrew J. Zammit & Dr. Nicole Attard

Moving towards the concept of a European data economy

Digital data is a fundamental resource for economic progress, job creation, citizen empowerment, competitiveness, and business development. The European Union (EU) must guarantee that data flows across borders and sectors. This data should be available and reusable by stakeholders in an efficient manner and supplemented by superior computing capabilities to scrutinise such data. Indeed, the utilisation of intelligent data supports the production of brand-new products and services, the continued development of such production, the growth of the target market, and the strengthening of research and development.

Digital data-based products and services can revolutionise certain sectors such as those relating to the environment, finance, climate, intelligent transport systems, and smart cities. Data analysis may assist in the furtherance of decision-making, modernisation and the forecast of forthcoming events. For instance, a study on data-driven decision making has concluded that businesses that opt to establish their decision-making procedure on facts extracted from data can increase productivity by approximately 6 percent.

The discussion on data has recently gained ground and it may be deemed to be the essence of today’s global economy since data embodies a new form of economic asset. Companies and individuals are utilising data to attain a competitive edge in today’s technological world. The Commission’s mid-term review communication provides that once the necessary policies and laws are enacted, the data economy’s worth will increase to EUR 739 billion by the year 2020.

The strategy for a digital single market

The Commission communicated its Digital Single Market Strategy on the 6th of May 2015 with the intention of taking full advantage of the ever-growing digital economy. The Digital Single Market Strategy comprises of three “pillars” and attempts to achieve three crucial objectives. Firstly, it strives to provide swifter online access for consumers and companies to goods and services within the European Union. Additionally, it endeavours to provide the most optimal conditions for the proper functioning of digital networks and services. Lastly, it undertakes to capitalise on the growth potential of the EU’s digital economy. The latter objective regarding the digital economy may be achieved by employing three methods. First and foremost, by expanding the Data Economy, by intensifying competitiveness through interoperability and standardisation and by promoting an all-embracing digital society.

In relation to the development of the Data Economy within the ambit of the Digital Single Market Strategy, Andrus Ansip, Vice-President for the Digital Single Market, states that: “Data should be able to flow freely between locations, across borders and within a single data space. In Europe, data flow and data access are often held up by localisation rules or other technical and legal barriers…”. In the view of Vice-President Ansip’s opinion, it is safe to say that currently the EU is not adequately addressing the digital single market for data.

This is a direct consequence of several barriers to the free movement of data within the EU and a result of an array of legal anomalies relating to data. For instance, it is pertinent to note that while the General Data Protection Regulation already addresses the rules relating to personal data, non-personal data falls outside the ambit of this Regulation. This means that national and regional rules may be imposed to restrict the free movement of non-personal data. Currently, the re-utilisation and access to non-personal data in a B2B setting are dealt with between businesses by tackling each case individually.   For the sake of clarity, non-personal data includes but is not limited to invoices, accounting related documents and auxiliary company registration documents.

Nevertheless, the Commission is aware of the Digital Single Market’s deficiencies and therefore it has undertaken to:

  • Encourage dialogue between Member States and stakeholders with regards to the proportionality of data localisation limitations constraints. The ultimate aim is to gather more information on the attributes of these constraints and their resulting repercussions on businesses, public organisations, small and medium-sized enterprises (SMEs) and start-up companies.
  • Introduce enforcement actions and, if necessary, take further steps to tackle unwarranted or inconsistent data location limitations.

The commission’s package on “Building the European data economy”

As a result, on the 10th of January 2017 the Commission demonstrated its high level of commitment by adopting the “Building the European Data Economy” package which includes a Staff Working Document and Communication. The Commission has introduced this package to study any existing impediments relating to the free movement of data and to investigate some grey areas that have developed through the introduction of new technologies such as autonomous products and the Internet of Things. Indeed, the Communication delves into an examination of national laws and regulations that hamper the free movement of data and it sets forth proposals to do away with baseless and inconsistent data location restrictions. Moreover, the Communication tackles problematic areas such as data portability, access to and transfer of data, and machine-generated digital data. The Communication is supplemented by a public consultation and the Staff Working Document which also looks into the free movement of data and other relatively new issues relating to the European Data Economy.

The Communication addresses the following legal issues:

  • Data access and transfer: The current trend amongst companies operating within the EU is to analyse data internally. Data is hardly ever shared with external parties for analytical purposes. At present, there are no policies set in place for the economic utilisation, re-use and tradability of non-personal and anonymised data.
  • Free Flow of Data: As a direct result of digitisation, the success of selling goods and services rests on the innovative utilisation of data. Problems which may affect the free flow of data may concern legal or administrative constraints on data location which may preclude the private and public sectors from having the option of enjoying access to alternative data services. The Commission believes that data may be kept in any Member State and it believes that any constraints may be counteracted by the removal of data localisation restrictions, unless such restrictions are essential for security purposes.
  • Liability connected to data-based products and services: Regrettably, EU Liability rules did not develop to complement today’s digital market. Problems relating to responsibility continuously crop up due to the multitude of stakeholders operating within such a composite and diverse market. These legal anomalies are taking a toll on innovation and on the trustworthiness of data-based products and services. Consequently, it is high time that the notion of responsibility is redefined in light of the generation of risk and how it is managed.
  • Data portability, interoperability and standards. Data portability refers to the possibility of having data transferred from one system to another. Presently, the transfer of data is not easy to execute. In fact, the Communication states that the best way forward is to facilitate switching of service providers. Furthermore, portability must be supplemented by appropriate technical standards in furtherance of implementing meaningful portability in a technologically neutral manner. It is pertinent to note that data portability is frequently linked with data interoperability which essentially permits multiple digital services to exchange data effortlessly.

Hence, the purpose behind the consultation exercise was to gather information to:

  • Assess data localisation restrictions which may hinder the free flow of data within the European Union;
  • identify the extent of any obstacles to accessing such data; and
  • identify the way forward in tackling these barriers.

Conclusions

In its mid-term review the Commission provides that it intends to address the most significant issues which stood out during the course of the consultation process and it will move on to bring forward solid proposals to boost the growing EU Data Economy. Apart from tackling the legal issues mentioned above, the Commission intends to solidify the European Cloud Initiative by looking into the possibility of catering for cloud contracts entered into by businesses and the switching of cloud service providers.

Without a doubt, data-driven technologies are revolutionising our societies and economies, and the Commission’s enthusiasm on modernizing the current legal framework augurs well. The proper implementation of the Digital Single Market is of utmost importance. However, it is relevant to realise that the digital world will keep on evolving exponentially. The relevant stakeholders and the Commission should continuously monitor any new developments and innovations, and to this end the Commission is planning on proposing draft legislation on the cross-border free flow of non-personal data in autumn 2017.

For further information about how GVZH Advocates can help you with your technology, media or telecommunications legal requirements, kindly contact us on tmt@gvzh.com.mt.

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