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European Data Act to make it easier to switch cloud services

The new European rules regarding IT services in ‘clouds’ are needed for making the market for business cloud services more competitive. This has been one of the main conclusions of the Netherlands Authority for Consumers and Markets (ACM) following the follow-up investigation into switching barriers in this sector. Last year, ACM published a market study into cloud services. The follow-up investigation has revealed there is uncertainty about whether the existing competition rules can be used to deal with the switching barriers in the cloud-service sector in a structural and relatively swift manner. The upcoming, new European rules such as the Data Act and the Digital Markets Act offer more opportunities for solving the identified market concerns relatively swiftly and effectively.

Martijn Snoep, Chairman of the Board of ACM, explains: ”Clouds play a key role in the digital economy. We need to make sure that switching cloud services becomes easier. That will make the market more competitive, which will have a positive effect on the prices and quality of cloud services. Although the existing competition rules do offer indirect ways to make this possible, the new rules in the European Data Act will be easier to apply. We hope that the European Parliament together with the European Commission will soon reach agreement on a robust Data Act.”

Cloud providers offer IT services that businesses are able to use online. These cloud providers (such as Microsoft Azure or Amazon Web Services) are not allowed to make it more difficult to switch cloud services, for example, by erecting unnecessarily high financial or technical barriers. In addition, businesses must also be able to use cloud services of other businesses while leaving their data with the cloud company they already have a contract with.

New European rules in the making

The Data Act will make it easier to transfer data from one cloud-service provider to another. In addition, it will soon no longer be possible to charge any costs if a business wishes to switch providers and remove its data from its current cloud-service provider. Also, ACM is in favor of adding provisions to the Data Act guaranteeing hassle-free interoperability. That means it will be easier to exchange data or to connect systems to the services in the cloud. This can be realized, for example, by using open standards for communication between different IT systems. As long as the Data Act has not yet come into effect, it remains critical that, when entering into new contracts with cloud providers, businesses scan those contracts to see if and how they can switch providers, and what the rules are for data exchange and data use.

No further investigation into switching barriers

Following the market study into cloud services, ACM launched a follow-up investigation into competition problems caused by barriers to switch cloud services. This investigation revealed there is uncertainty about whether the existing competition rules can be used to solve the identified risks in a structural and relatively swift manner. Since the Data Act, but also the Digital Markets Act, will be able to solve several major problems sooner, ACM has decided to close the follow-up investigation. If ACM were to receive any new, concrete reports regarding switching barriers erected by providers, those would obviously be reason for ACM to launch another investigation under the competition rules.

ACM and the digital economy

ACM focuses on protecting people and businesses against abuses of market power and on combating deception and manipulation of consumers in the digital economy, so that everyone will be able to reap the benefits offered by the digital economy.

See also:

05-09-2022 ACM: amendments to Data Act necessary for promoting competition among cloud providers |