Done and dusted: what does the Data Act mean for startups?

November 16, 2023
Data Act

On 9 November 2023, the European Parliament adopted the final text of the Data Act, by a majority of 481 votes in favour, 31 votes against, and 71 abstentions. The Data Act has the potential to fulfill its promise of boosting Europe’s competitiveness and innovation capacity by harmonising rules on access and use of industrial data in the EU. This blog post assesses to what extent policymakers are considering startups’ needs. 

Allied for Startups and its Members shared three key priorities with policymakers to maximise the potential of the Data Act for startups: 1) we called for improving text clarity and maintaining proportionality to reduce ambiguities and uncertainties; 2) we asked policy makers for data portability and interoperability provisions for startups; and, 3) we advocated for rules that encourage taking advantage of the global data economy. Let’s take a deeper look at these three provisions in the final text. 

1. Clarity and proportionality: Despite the efforts made to define the scope of data, products, and services covered by the Data Act, as well as the attempt to clarify its overlaps with other legislation, startups continue to raise concerns over encountering challenges in navigating both the existing and upcoming patchwork of regulations. 

2. Data portability and interoperability provisions for startups: we praise the commitment to facilitate cloud switching, but we fear that startups that are service providers will have difficulties meeting the strict functional equivalence obligations and mandatory transition periods, in contrast with established players. 

3. Rules that encourage taking advantage of the global data economy: we value the incorporation of guidelines and the offering of assistance to startups when assessing the lawfulness of a transfer. Yet, we remain concerned that the strict safeguards might be setting the stage for sovereignty requirements that will require startups to store data within the EU.

In summary, the agreement on the Data Act is one of the final milestones on a journey that began nearly a year and a half ago. The next step is to discuss how this pioneering regulation will be implemented. The Data Act will be applicable as of mid-2025, and Allied for Startups will continue monitoring the situation, making sure that the process is steered in favour of startups and innovation.