To promote the digital economy in Europe, the EU is further developing the legal framework for digital services and markets. The provisions of the Data Governance Act on data spaces and other platforms for data exchange are an important part of this framework. The EU Council issued an opinion on this in September 2021. For businesses in the digital economy, it is important to stay abreast of these developments and check whether their business model will be compatible with the new legal framework.

Digital platforms for data trading and exchange are an important element of the digital economy. Due to the great significance data exchange platforms have for the data economy, the draft of the Data Governance Act includes special provisions for data intermediaries who operate data spaces to bring together data providers and data users and promote the exchange of data.

Data spaces available to businesses to exchange data are an important part of the data strategies of the European Commission and the German Federal Government. Data spaces provide trusted joint transaction spaces for participants, enabling the exchange or joint evaluation or exploitation of data. They will play an important role in the further development of the data economy.

Legal requirements laid down in the Data Governance Act

Given the tremendous importance data spaces for data trading and exchange will have for the European data economy in the future, the Data Governance Act will include a number of provisions to ensure that data spaces remain independent and neutral and access to them is secure. The aim is to provide for a clear separation between platform operators and data providers to prevent any conflicts of interest.

The Data Governance Act provides for data intermediaries who intermediate the exchange of data to restrict themselves to this intermediary role between market participants and not to engage in data trading themselves. They must restrict themselves to intermediating the exchange of data between market participants and may use data only for this purpose. Data intermediaries must provide their services through a legally independent structure, e.g. through an independent company with limited liability under German law [Gesellschaft mit beschränkter Haftung – GmbH], which operates the data trading platform (see Art. 11 of the draft of the Data Governance Act).

Moreover, data intermediaries will be required to ensure that the procedure for access to the data space is fair, transparent and non-discriminatory for all interested data holders and data users. They will also be required to ensure a high level of security of the platform.

To ensure that these stringent requirements are met, Art. 10 of the draft of the Data Governance Act requires data intermediaries to submit a notification of their services to the competent authority.

The intention of these provisions of the Data Governance Act is to ensure that the players of the data economy have access to the data and no conflicts of interest arise. Past experience has shown that operators may take advantage of their position if they are providers of products at the same time. This would be detrimental to the users of the platform.

The Council of the European Union, where Member States are represented by their competent national ministers, issued its opinion on the Data Governance Act in September 2021. The Council, too, takes a positive attitude towards the creation of data spaces and supports the main provisions of the Data Governance Act.

Delimitation from other activities of the data economy

The digital economy has criticised that the draft of the Data Governance Act does not define its scope of application clearly enough and that this may give rise to problems.

Data intermediaries and in particular data spaces should take an independent and neutral position to be able to perform their important task in the data economy. However, there are also data providers such as major businesses who hold huge amounts of data and trade in them. They are not data intermediaries but data traders. They are not neutral but pursue interests of their own. There are many examples of this in the telecommunications or financial sectors or among industrial players. They do an important job because they increase the range and volume of available data, which is by no means to be restricted by the Data Governance Act.

In the legislative procedure for the Data Governance Act, it was criticised that the scope of application of the Regulation had not been clearly defined. As a result, some providers had reason to fear that they would suddenly be classified as data intermediaries. This would have had severe consequences for them, even including the discontinuation of their business.

The Council of the European Union addressed these concerns and included a delimitation provision to introduce a clear separation between data intermediaries and other players. It has now been specified more clearly in Recitals 22 and 22a and in the definitions in Art. 2(2a) of the Data Governance Act which services are or are not covered.

Data intermediaries are service providers that have the establishment of a direct legal or business relationship between data providers and data users as their main task. The proposal of the Council draws a clearer distinction to data traders in this regard: service providers that aggregate, enrich or transform the data to sell the end products to data users are not data intermediaries. The opinion also includes provisions on content providers (in particular on offers of copyright-protected material), on platforms operated by a single data holder and manufacturers and providers of IoT devices and services.

Evaluation of the provisions and their impact on businesses

Data spaces are important platforms for the exchange of data and further development of the European data economy. The EU legislator’s creation of a legal framework to ensure by law that data spaces remain neutral and independent is something to be very much welcomed. This will allow businesses in Germany and in Europe to exchange data in secure data spaces and will promote the German and European digital economy. Businesses outside Europe will also appreciate that EU data spaces are guaranteed by law to be independent and neutral and to ensure a fair access procedure and high level of security.

The clear delimitation provision in the proposal of the Council of the European Union is also to be welcomed. Data providers and other players of the data economy are not to be restricted in their activities. Businesses aggregating data to create new data products from them do not operate a neutral data market place but are traders who make and sell a product.

The opinion of the Council has significantly advanced the legislative procedure. The provisions the Data Governance Act will have are very important for all players in the data economy. Businesses planning to offer and trade in data need to keep a close eye on the Data Governance Act already now. They also need to make sure they delimit their activities clearly from those of data spaces, data marketplaces and other data intermediaries. Otherwise they will be subject to statutory requirements that do not fit their entrepreneurial activities. It is therefore important for them to check whether their business model will be compatible with the new provisions or whether it needs adjustment.