EU finalizes a new legislation for data sharing

CIO Review Europe | Thursday, March 05, 2020

Data sharing might cover consumers' data, including their transactions with online products and services, as the EU finalizes a new legislation.

FREMONT, CA: Data sharing is a major component of the European Union's online economic strategy. European courts have used compelled data sharing as an antitrust remedy for decades. The Magill judgment from 1995, the IMS decision from 2004, and the Microsoft decision from 2007 all set precedent for data sharing remedies.

Data on dominating firms' processes, structures, and internal papers was frequently given in these circumstances, rather than user data. Although these treatments have proven to be beneficial in the past, the European approach to data sharing is changing. This time, data sharing might cover consumers' data, including their transactions with online products and services, as the EU finalizes a new legislation.

The European Parliament and EU member states have secured an agreement on the European Data Governance Act in recent weeks. It came after the European Commission proposed mandating the sharing of various sorts of data, including personal data. In the next few days, the European Commission will introduce the Data Act, which will include laws to provide citizens and corporations more control over data sharing.

From a competition standpoint, these activities aim to address concerns about data accumulation. The underlying concept is based on the rising notion that data is the new oil. If the analogy is right, multiple organizations would be able to use the same data with ease, and data sharing would be beneficial. However, the analogy is incorrect. To begin with, unlike oil, data is non-fungible; each dataset is distinct. Second, data is an experience good, which means that businesses create value by mixing data with other data and internal processes. It has no intrinsic worth, unlike oil, which has a recognized market value prior to acquisition. Finally, the returns to scale for oil are relatively constant: When the price of oil rises, so does the amount of output. When the costs of managing data outweigh the benefits, data has rapidly diminishing returns, eventually leading to no or negative returns.

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