Proposed amendments by the Netherlands to the EU’s Data Act could support interoperability, although some provisions could see lengthy negotiations
Concerns over price, quality and innovation in cloud services: Businesses in the Netherlands are among the leaders in Europe in cloud usage, with 65% using cloud services in 2021 compared with an average of 41% across the rest of the region. However, a new study by the Authority for Consumers and Markets (ACM) has identified a number of concerns with the functioning of the Dutch cloud market. The regulator’s study finds that it is hard for users of cloud services to switch providers or to combine the services of different providers. Consequently, it sees risks for price, quality and innovation in the cloud market.
The current draft of the EU Data Act leaves room for improvement: The ACM is concerned about the prospect of further consolidation among cloud providers, with the large market shares of Microsoft Azure and Amazon Web Services (35-40% each) already making it difficult for smaller firms to compete effectively. The regulator is also concerned about practices to lock in users by offering free cloud services or volume discounts, or to discourage switching by charging high fees for data transfers. In practice, it can be technically challenging to switch providers as different cloud services are rarely able to communicate properly and data cannot always be transferred easily because of a lack of standards. Due to limited data portability and interoperability, businesses and organisations enjoy “little freedom” in their choice of cloud provider. While the EU’s Data Act should facilitate switching, the ACM believes that the act alone is insufficient to ensure a well-functioning cloud services market.
Regulator proposes amendments to drive interoperability: Given its concerns, the ACM has proposed amendments to the Data Act to make it easier for users to combine cloud services in a flexible manner. As well as existing proposals to lower switching barriers through data portability, the regulator believes that the act should require cloud providers to enable interoperability (i.e. the ability of cloud services to work together) and introduce a cap on interoperability rates. This would enable users to acquire cloud services from different providers that best meet their needs best at the best possible price. However, the Data Act is facing further criticisms, for example regarding clarity and compatibility with the GDPR, while stakeholders have warned about the possible effects of additional regulation. It appears that a number of tough compromises will need reaching before a final text can be adopted.
