In today’s digital economy, data is one of the most valuable assets a business can hold. But with increasing reliance on connected devices and digital services, understanding how to use and share that data responsibly has never been more important.
The introduction of the data act by the European Union aims to make data use fairer, more transparent, and more competitive — particularly for startups and SMEs.
This article explores what the EU Data Act is, how it affects entrepreneurs, and what steps businesses should take to stay compliant and capitalise on new opportunities.
What Is the EU Data Act?
The EU Data Act is a new regulation that came into force in 2024, with full implementation expected in 2025. Its goal is to create a unified framework for data sharing across the European Union, ensuring that businesses, consumers, and public bodies can access and use data more equitably.
In essence, the Act governs:
- Who can access data generated by connected products and services
- How that data can be shared between organisations
- The rights of consumers and businesses to use and control their data
It complements the EU’s broader digital strategy, building on existing laws like the General Data Protection Regulation (GDPR) and the Data Governance Act. For more information, visit this GOV.UK resource.
Why the Data Act Matters for Startups and Entrepreneurs
For many startups, data is central to innovation. Whether you’re developing AI tools, IoT devices, or digital platforms, access to quality data determines how effectively you can scale. The EU Data Act opens up new opportunities for smaller businesses to compete with established tech giants by improving access to non-personal data.
Key benefits include:
- Fairer data access: Manufacturers of connected devices (like smart appliances or vehicles) must make data available to users and, where permitted, third parties.
- Increased competition: Startups can build services that rely on machine-generated data without needing exclusive partnerships with large corporations.
- Cross-sector innovation: Easier data sharing promotes collaboration between industries — for example, between energy providers and tech developers.
However, these benefits come with new responsibilities.
Understanding Your Obligations
The Data Act introduces obligations for businesses that collect, share, or use data. These include:
- Transparency: Businesses must clearly inform users about what data is collected, how it’s used, and who it’s shared with.
- Fair contracts: The Act prohibits unfair contractual terms in data-sharing agreements, particularly where one party has significantly more bargaining power.
- Data portability: Users should be able to transfer data easily between service providers.
For startups, this means reviewing how data flows through your organisation — from collection and storage to sharing and analysis — and ensuring your policies align with these principles.
The Relationship Between the Data Act and GDPR
It’s important to note that the EU Data Act does not replace GDPR. Instead, it complements it by focusing on non-personal and industrial data. GDPR governs personal data (information about individuals), while the Data Act governs access to data generated by products or services.
For example, under GDPR, a business must protect customer personal information. Under the Data Act, it must also manage how machine-generated data — such as performance logs from a smart device — is shared or made available to others.
Together, these regulations create a framework where personal and non-personal data can flow safely, promoting innovation while protecting rights.
Data Sharing and Contractual Fairness
The Data Act places a strong emphasis on fair contracts between companies, particularly where there’s an imbalance of power. Larger corporations can no longer impose unfair data-sharing conditions on smaller businesses.
For example, startups providing analytics services should be able to negotiate fair terms when accessing data from IoT manufacturers or cloud platforms. This levels the playing field and helps young companies compete more effectively.
To stay compliant, entrepreneurs should:
- Review existing data-sharing contracts
- Avoid restrictive clauses that prevent data reuse
- Ensure that contracts define responsibilities and data ownership clearly
Cloud Services and Data Portability
One of the most significant changes under the EU Data Act is the focus on data portability. Businesses should be able to move their data easily between cloud service providers without facing technical or financial barriers.
This provision benefits startups by preventing vendor lock-in and encouraging interoperability between systems. For instance, if your startup uses one cloud provider for storage and another for analytics, you should be able to transfer your data seamlessly.
Cloud providers will also be subject to new transparency requirements, including notifying customers about how their data is stored, processed and protected.
The European Commission’s Digital Strategy page provides more information on the data act.
Steps Entrepreneurs Should Take Now
Preparing for compliance doesn’t need to be overwhelming. Here are practical steps startups can take today:
- Audit your data flows: Identify what data you collect, where it’s stored, and who has access.
- Update contracts: Ensure agreements with partners, clients, or service providers include fair data-sharing terms.
- Implement data governance policies: Create internal rules for handling, sharing, and securing data.
- Train your team: Make sure employees understand data rights and obligations.
- Seek legal guidance: Work with a solicitor who understands EU data law to review your compliance strategy.
These steps not only reduce legal risks but also strengthen your business reputation and build trust with customers.
The Opportunities Ahead
While the EU Data Act introduces new compliance requirements, it also creates opportunities for innovation. For entrepreneurs, it means fairer access to the data needed to develop AI systems, improve products, and collaborate across industries.
In the long term, the Act could drive a more open, competitive data economy — one where startups can thrive alongside established players.
Final Thoughts: Turning Regulation Into Advantage
For startups and small businesses, the EU Data Act isn’t just another piece of red tape — it’s a chance to grow in a fairer, more transparent digital marketplace. By embracing the new framework early, entrepreneurs can demonstrate compliance, attract investors, and build trust with customers and partners.
Data is the fuel of the modern economy. With a clear understanding of the EU Data Act, businesses can turn compliance into opportunity and position themselves at the forefront of Europe’s digital future.
Legal Disclaimer: This article is for general information only and does not constitute legal advice. Businesses should seek professional legal guidance to ensure compliance with data protection and sharing regulations.
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