Jussi Mäkinen

Data Act: Bumps on the Road of Innovation and Green Transformation

Jussi Mäkinen

On Thursday, the European Parliament’s select committee on Industry, Research, and Energy (ITRE) voted on its report on the Data Act. It became quite clear that the needs and reality of European industry fell in many ways by the wayside on this important step towards European regulation of industrial data.     

Whereas the European Commission proposal for the Data Act and the Council’s work on the file maintain a principle-driven approach on manufacturers’ obligation to share data to the users of connected products, the ITRE committee compromise amendments foresee a minute micromanagement of data sharing rules. This is detrimental to European innovation and, eventually, the green transformation.

This is detrimental to European innovation and, eventually, the green transformation.

In its current form, the report does not adequately reflect the nature of data, current industry practices, and agreements over data and its usage. According to the report, the Data Act ought to establish a market for selling data. The reality in companies is to put data into use and gain better insights, improve efficiency, and create value to the customers; as the first stages in the standardisation and creation of data products progress, the ITRE approach misses the big picture and most essentially, industry’s needs.  

There are two major problems at the heart of the report. To begin with, the definition of data is very broad and there is a strict ban for the manufacturer and underlying value chain to learn from the data and use it as basis for innovation.

The report suggests that any data that the connected device communicates back to the manufacturer should belong to the user. Only information attained by ‘multiple sensors’ and ‘complex proprietary algorithms’ would be exempted. This goes much further than the Commission proposal and would lead to giving out manufacturer’s proprietary information. If Europe takes too bold a stand on mandated data sharing, it will be warmly welcomed by our global competititors.They would be ready to reap the European manufacturers’ know-how on product design and other assets that grant our companies a narrow competitive edge – which is often based on years of research.

If Europe takes too bold a stand on mandated data sharing, it will be warmly welcomed by our global competititors.

The other problem is that the rules for the use and sharing of data by manufacturers in their own network are too strict: manufacturers could get some usage rights, but only by agreement. The ITRE report seeks to forbid – for the sake of building a market for data – manufacturers from sharing data generated by the products to third parties. That would include the manufacturers’ own value chains. The report would therefore instate a ban on the most prominent use case for data in the industry. By getting real-life data, material producers and component manufacturers are not only able to perform quality control but to develop more sustainable and efficient materials and components. These innovations and improvements throughout the value chain are required for the industry to be able to meet energy efficiency and carbon reduction goals. Data is also highly valuable for building networks for advanced manufacturing.

The Parliament can still get its position fixed by introducing amendments before the plenary. Otherwise, the report mounts enormous pressure on other institutions – the Council and the Commission – to have a balanced solution on this cornerstone file for modern European industry. I sincerely hope that there is a strong appreciation among the co-legislators that it is European companies that bring about the green transformation in practice. To do that, they need data and balanced and realistic regulation to govern the development of practices.

For further information:

Jussi Mäkinen, Director, EU Regulation, Technology Industries of Finland, +358 40 900 3066, jussi.makinen@techind.fi