Read ETNO's full position here.

January 2017

ETNO on the European Data Economy 

 

BACKGROUND 

As one of the actions announced in the Digital Single Market Strategy of May 2015, the European Commission has been assessing an initiative on Building the European Data Economy with a Communication focusing on the so called “emerging issues” (access to/transfer of data, data ownership  and the liability challenges in the context of the Internet of Things and robotics) and a possible legislative proposal on “free flow of data” tackling unjustified restrictions on the location of data for storage or processing purposes within the EU. 

This “Data Economy Package” (including the legislative proposal on the review of the ePrivacy Directive) will be the latest DSM actions to be presented by the Commission and is expected in 2017. 

ETNO has been involved in various rounds of consultations on the question of data ownership and access to data, starting with the EC public consultations on platforms in 2015 (http://bit.ly/2hrXjEN). In all these consultations, ETNO has voiced the same conclusion: legislative regulatory intervention is generally not necessary as current contract law and practices provide an adequate framework. 

KEY MESSAGES

-    The data driven economy is paving the way for the ongoing industrial revolution. 
-    Data should be looked as a societal challenge and Data Driven Innovation as a huge opportunity to be embraced.
-    The EU needs an innovation friendly approach to data. 
-    The third pillar of the 2015 Digital Single Market Strategy focuses on maximizing the growth potential of the digital economy stressing the importance and the need of digitisation of all sectors for the EU to maintain its competitiveness and to manage the transition to a smart industrial and services economy. 
-    The completion of the European Digital Single Market is key to taking full advantage of this digital transformation and in order to be able to compete effectively worldwide.

Therefore, ETNO believes that:
•    No specific legislation assigning ownership-like rights in regard to non-personal data is required. Current contract law is sufficient to address the different needs of the parties involved.
•    Unless there is a market failure seriously restraining competition, any regulation regarding access to data within the private sector would seriously hamper innovative business models created through aggregated data and discourage private initiatives and efforts to emerge in the future. 
•    The removal of unjustified restrictions to free flow of data should be enforced through existing measures, such as notification procedures.  The Commission should also consider extending these procedures to currently uncovered sectors. This will allow the Commission’s and Member States’ scrutiny of any draft national measure that would have a negative impact on the well-functioning of the internal market.

EMERGING ISSUES

Within the implementation of the DSM Actions, the European Commission is evaluating if EU action is necessary to tackle the so-called “emerging issues” regarding data ownership, access to data and liability. 

Currently, we are facing a tension between Openness and Closeness (such as legitimate concerns over Privacy or Intellectual Property Rights) and the right balance needs to be established. 

Now it is the moment for Europe to embrace the new digital technologies which would transform social relationships, business and the public sector, creating jobs and growth. These opportunities are all underpinned by data, with exciting developments in big data analytics, cloud computing and the Internet of Things. Big Data holds the promise of transforming social relationships and businesses through job creation and financial growth. Indeed, data driven services will play a critical role in the digital life of the future. It is not only about future innovation, economic growth and competitiveness that the use of data could bring, but also about positive impact in the quality of life of citizens, their behaviours, their relation with Public Administrations and, in general, the way individuals understand the world they live in.  Data is the untapped resource of our time. European companies should be encouraged to invest in data-driven innovation, jobs and competitiveness. The new General Data Protection Regulation (GDPR) will help Europe to develop its Digital Single Market Strategy with innovation, jobs, growth and investment. On the contrary, a misunderstood one-sided tunnel vision of threats to privacy will jeopardize the development of strong data markets in Europe. 

There is a misconception on the notion of “data ownership” and the debate which has been launched around it. Data in itself is only an abstract concept and should not be regulated as such. More important is to understand the context in which data is used (e.g.: Internet of Things).

Today, businesses are relying in most cases on contractual solutions in order to address issues related to ownership, collection and processing of data and current general rules on contracts, liability, personal data and competition law are fit for purpose. ETNO believes that – as long as market failure has not been detected in relation to non-personal data in a B2B context – no specific ex-ante legislation assigning ownership-like rights is required, but a refreshed application of competition law taking into consideration the specific features of the digital ecosystem would be required. 

While legal certainty regarding different liabilities at stake is fundamental, this does not automatically mean that legislation should be proposed. On the contrary, policy makers must refrain from rushing into regulation, but rather carefully assess if and where EU action is really needed and will bring additional value to business and citizens. The EU needs an innovation-friendly approach to data and not burdensome obligations, which would limit flexibility.

Current contract law and practices generally allow to adapt to the different needs of the contracting parties. The private sector is free to share its data based on contractual terms. It is of utmost importance that contractual freedom is maintained, otherwise innovation on big data will suffer dramatically. 

The same notion generally applies to considerations of regulating access to data within the private sector: unless there is a market failure seriously restraining competition, any such regulation would seriously hamper innovative business models created through aggregated data, and discourage private initiatives and efforts to emerge in the future, thus discouraging private businesses to invest. Hence, to avoid detrimental effects on innovation and competition, any such initiative should – if considered useful – rely on voluntary action by private businesses. 

In case of observed market failure, it is unclear whether any static and traditional regulation is appropriate, since the dynamics of digital markets actually offers a more flexible and effective approach. Specific abusive practices of eventual dominant players in data-related markets are already under scrutiny of competition authorities, who should take utmost account of the specificities of the competitive dynamics in digital ecosystems, in order to tackle abusive conduct more efficiently and accurately.

FREE FLOW OF DATA

The European Commission is also evaluating if any legislative or non-legislative action at EU level is necessary to address the issue of forced localization of data as a barrier to the free flow of data within the EU.

Many pieces of EU legislation already aim at the free flow of data within the EU. The recently adopted GDPR reinforces the principles (already included in the current Data Protection Directive 1995/46/EC) of free movement of personal data aiming at eliminating barriers within the EU as well as improving business opportunities by facilitating the free flow of such data within the Digital Single Market. 

In the data driven economy, companies need efficient transfer mechanisms of personal and non-personal data across borders in order to respond to customers’ needs. Restrictions on the location of data should only be allowed if they reflect objective, proportionate and justified reasons of public interest, such as national security or law enforcement needs. ETNO believes that the protection of fundamental rights of individuals must remain as a key concern and be guaranteed in the context of promoting free data flows. Yet, as the European Commission is currently analysing existing data localisation rules at EU level, it should carefully evaluate any restrictions (e.g. specifically in relation to national security and data protection) to determine which exceptions might still be justified in the future and which could be lifted (due to disproportionate restrictions that could be considered unnecessary without proven benefits for policy objectives like data security).  

Therefore, ETNO supports that the removal of unjustified restrictions to free flow of data is adequately taken into account in  notification procedures  already established by EU Law (e.g. under  the E-commerce Directive, the Services Directive or the Transparency Directive 2015/1535/EC) and that the Commission considers extending these procedures to currently uncovered sectors. This will allow the Commission’s and Member States’ scrutiny of any draft national measure that would have a negative impact in the well-functioning of the Internal Market.

ETNO (European Telecommunications Network Operators' Association) represents Europe’s telecommunications network operators and is the principal policy group for European e-communications network operators. ETNO’s primary purpose is to promote a positive policy environment allowing the EU telecommunications sector to deliver best quality services to consumers and businesses. 

For questions and clarifications regarding this position paper, please contact Marta Capelo capelo@etno.eu.