Insight
The EU’s plan to unlock industrial data needs a rethink by Zach Meyers, 8 July 2022 The EU’s ambition for industry to better exploit data is a worthy and realistic one. But expanding some of the GDPR’s rules to industrial data would be a mistake. In recent years, the EU has cemented its status as a first-mover in tech regulation. Having completed the Digital Markets Act and the Digital Services Act, EU member-states are now turning to another digital priority: fulfilling the 2020 data strategy. The strategy encourages European firms and governments to better exploit industrial data, which can essentially be defined as any data which is not personal. Industrial data is a sensible focus for Brussels. Europe has failed to create large-scale, consumer-oriented digital giants of the scale of Google and Microsoft. But the EU remains an industrial powerhouse. It therefore has a realistic chance of becoming a global leader in the ‘Internet of Things’ – consumer or industrial devices which are networked and continuously communicating data which is not always linked to identifiable individuals. These devices could include connected cars, medical devices, factory sensors, industrial robots and usage data from smart household appliances. To lead in these areas, European industry will need to adapt quickly: economic value in the Internet of Things sector is quickly moving away from hardware and towards software and services, such as artificial intelligence systems which use industrial data, which are not Europe’s traditional strengths. The EU has already passed sensible regulations to help unlock commerce in industrial data – so that data can be obtained by firms best placed to exploit it. For example, the EU requires public authorities to open up their datasets; it removed barriers to non-personal data transfers within the EU; and lawmakers recently agreed the Data Governance Act (DGA) to encourage voluntary data-sharing in the private sector. The Czech presidency of the EU is now prioritising the Data Act, a ground-breaking proposal by the European Commission. The proposal represents a radical departure from the EU’s (sensible) 2020 data strategy. The Data Act instead applies concepts from the General Data Protection Regulation (GDPR) – which protects personal data – to industrial data. That is a bad idea, given growing evidence that the GDPR has reduced innovation by small firms. The Data Act aims to address the concern that 80 per cent of industrial data collected in the EU is never used. To some extent, this seems to be a valid concern – only a minority of EU firms use big datasets, and for medium and large businesses the figure is starting to flatline (Chart 1). CER INSIGHT: The EU’s plan to unlock industrial data needs a rethink 8 July 2022
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