The Major Role Interoperability Plays in the Data Act

What “interoperability” means: moving data from one platform to another

Interoperability in the data economy means that service providers can interact seamlessly. For this to happen, the data used by one service provider must be compatible with others. What looks simple at first sight turns out to be a difficult task because data is not (yet) a standardized commodity. Data comes in countless formats, types, and shapes. For using data across different service providers and market participants, data needs to be — at least partially — harmonized. This requires common standards on how data is designed, stored, and linked together.

Interoperability is already in place: Standard and norm-setting in the economy

Interoperability is a fundamental principle in the European Union and the backbone of the Single Market as it ensures that commodities produced in different member states and traded across borders are compatible.

The benefit of interoperability

The lack of interoperability is the foundation for monopolies in the data economy as it reinforces the network effect — the value of each user of a service increases the more users there are. A messenger service used by only some of a user’s contact is not as valuable as a messenger service used by all of them. The flipside of the network effect is that it creates lock-in effects because it increases the costs of changing the service provider.

Interoperability trade-off: Innovation vs. standardization

Interoperability achieved by defining common standards raises concerns about the negative impact on innovative activity. Innovation may be limited or even prevented by limiting the room for revolutionary creativity. Setting too many or too narrow standards can create adverse effects by preventing disruptive innovation, which could advance society for good. Too few standards reveal the negative effects we are currently experiencing in the data economy. Therefore, the trade-off between room for innovation and excluding negative effects caused by network and lock-in effects is crucial when imposing standards.

The EU’s evolving stance on interoperability

The first legislative measure at the EU level that incorporated the idea of interoperability was the GPDR which foresees in Article 20 a right to data portability, i.e., retrieving and carrying your data to other providers. To achieve complete data portability, interoperability is required. Currently, service providers allow exporting data, but it usually follows no industry standard, which makes the exported data not viable.

Implementing interoperability as long-term project

Interoperability is key for regulating the data economy according to European values such as fairness, equality, and transparency. A lack of interoperability is closely associated with the current situation dominated by monopolistic service providers, which act in closed and isolated data-rich networks. With the Data Act the latest in a series of legislative or regulatory policies, interoperability aims to open these networks.



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Global & European Dynamics

Global & European Dynamics

Our mission on this blog is to shed light on Europe’s role in the world economy.