Who is covered?
The Data Act applies to manufacturers of connected products and related services, users of those products, and recipients of data shared under the Regulation.
In addition, the Regulation applies to providers of data processing services. This concept covers a broad range of cloud-based solutions, including Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS), as well as other digital services providing access to scalable and flexible computing resources.
The Regulation also applies to providers established outside the EU where they offer services to customers within the Union.
As a result, both European and international cloud providers will need to assess and address the requirements introduced by the Data Act.
Addressing vendor lock-in
Many businesses today rely on cloud services to support business-critical systems and data. At the same time, changing providers can often be both time-consuming and costly, particularly where data is stored in proprietary formats or contractual arrangements restrict migration options.
The Data Act seeks to address this challenge by reducing the risk of vendor lock-in. The objective is to create a more competitive market in which customers can more easily choose the solution that best meets their needs.
The new switching rights
Chapter VI of the Regulation grants customers of data processing services a number of rights when changing providers.
Among other things, customers must be able to transfer their data and digital assets to another provider offering the same type of service. The rules also allow customers to move data to multiple providers simultaneously or to their own on-premises IT infrastructure.
Providers are required to facilitate the migration process and may not maintain technical, contractual, or commercial barriers that unnecessarily hinder or delay switching.
A key element of the framework is the right to export relevant data in a usable format. The purpose is to ensure that customers can effectively take their data with them at the end of a contractual relationship and are not locked into a particular provider for technical reasons.
Implications for cloud providers
The new rules impose additional requirements on cloud providers’ contracts, technical solutions, and internal processes. Providers must ensure that customers can carry out migrations within the framework established by the Data Act and that transition arrangements support an effective and orderly switch. The Regulation also limits the use of fees and other economic mechanisms that could, in practice, discourage customers from moving their data to alternative solutions.
Our observations
The rules on switching rights are one of the clearest examples of the EU’s ambition to open digital markets and strengthen competition. While businesses have historically faced technical and contractual barriers that made switching providers challenging in practice, the Data Act seeks to ensure that customers can genuinely move data, systems, and workloads between competing solutions.
For many organisations, the real value of these rules may not lie in the ability to switch provider itself, but in the increased bargaining power that comes with it. When customers have a realistic ability to leave a service, the dynamics of the supplier relationship change. This may influence everything from pricing discussions and contract negotiations to technology choices and long-term sourcing strategies.
If you have any questions about the Data Act, or would like to discuss how the new rules may affect your business, you are always welcome to contact CO:PLAY.