Forced data sharing is a bad idea

When data is shared, whether it is open data from the public sector or otherwise, it creates great opportunities and enables new services. Of course, the European Commission has caught on to this. They like it so much that they now want to force companies to share data.

Already today, companies share data voluntarily. For example, private companies made large amounts of data available during the pandemic to allow authorities and others to analyze the situation and take the right measures to fight the pandemic. In addition, there are legal requirements for companies to hand over certain types of data and information. But now the Commission wants to go further - much further - and talks about "fairly sharing benefits" from connected products' data. This is no small thing. It's a direction that raises many different questions and where different interests collide. Unfortunately, the impact assessment in the draft legislation now presented is far from thorough.

In its initial comments, the Swedish government has chosen to particularly welcome the proposals on control and transparency of data held by companies. Furthermore, the government considers that the parts of the proposal aimed at enabling authorities to access data when there is an "exceptional need" or a "public interest" in such data "are reasonable". However, it must be recognized that there is a high risk that such proposals will create uncertainty around investments in data and thus reduce the opportunities for data-driven innovation.

The definitions of when authorities can confiscate data are far too unclear. This can lead to the authorities, both Swedish and EU authorities, casually starting to request large amounts of data. Companies' data is not something that the state should cast lustful glances at or handle arbitrarily. In TechSweden's consultation response, we write that a better balance is needed in the proposal to encourage investment and innovation in the data economy. Not least, it is worrying that the protection of trade secrets seems weak in the proposal.

To increase the use of data in the longer term, it is important that data sharing agreements remain voluntary and commercially viable. Instead of mandatory rules, the EU should work to make it easier for companies to share data voluntarily and create predictable and long-term forms of close cooperation between companies that do not risk breaching competition rules. Data flows and the data economy are global, so it is also important that the Data Act does not hamper the competitiveness of companies operating in the EU.

The Confederation of Swedish Enterprise, among others, has also pointed out the fundamental point - that there is no market failure to justify the sharing obligation. So the question legislators must now ask themselves is - is the proposal needed at all? The bill is general and will therefore cover all different sectors - even those where no data sharing problems exist. The economic benefit estimates are also questionable to say the least. Should the legislation go ahead, better protection of trade secrets is needed and the rules should not hamper data transfers to non-European countries.

Data sharing is good and should be encouraged. Doing so with mandatory rules, and in some cases confiscation, is intimidation and not encouragement. Nor is it the way forward for data sharing and data-driven innovation. The Commission should know better.

Fredrik Sand
Industry policy expert, TechSverige

Link to the reply to public consultation on the European Commission's proposal