Data sharing — Challenges and Opportunities

Maximizing the value of data requires leaders to embrace data sharing with other organizations. Collaboration in this area is key to unlocking the full potential of data.

It is predicted that the ability to share data within value networks will be one of the key factors for growth and success of companies. However, there are many reservations, such as concerns about data protection or doubts about giving other companies an advantage. There are also technical challenges.

The truth is that there is no black or white when it comes to this topic. However, companies should always be open to the idea and thoroughly weigh up the pros and cons before deciding whether to go for it or not.

Legal foundation

In 2023, the Council of the European Union adopted a law on “fair access to and fair use of data” (Data Act). The regulation contains new rules on who can access and use data generated in the EU across all economic sectors.

Its objectives are:

• to ensure a fair distribution of the value created from data among players in the digital environment
• to promote a competitive data market
• to create opportunities for data-driven innovation and make data more accessible to all

This law also aims to facilitate switching between providers of data processing services. In addition, it contains safeguards against unlawful data transfers and provides for the development of interoperability standards for the cross-sectoral reuse of data.

Background

The Data Act is another piece of legislation being introduced as part of the European Data Strategy, which was presented by the European Commission in February 2020. Prior to this, in 2022, the Data Governance Act was established, creating processes and structures to facilitate the sharing of data between companies, individuals and the public sector.

Legal challenges of data sharing

Data sharing between companies is subject to a variety of legal regulations and data protection laws. Companies must ensure that they have the consent of the parties concerned and at the same time ensure that the data transferred complies with legal requirements. Data protection agreements and confidentiality agreements are essential to minimize the legal risks. In general, failure to comply with data protection regulations can lead to serious legal consequences.

Opportunities

Promoting innovation

The Data Act enables users of connected products (IoT), whether consumers or businesses, to access the data generated by their devices. This change democratizes data access and enables users to share their data with third-party providers and collaborate on new ideas and innovations.

Cost reduction

By sharing relevant information, companies can develop more efficient processes. Sharing resources and data can also lead to cost savings, especially in research and development.

Rapid response in the event of a public emergency

The law allows public authorities to access private sector data in emergencies such as natural disasters or health crises. This can significantly improve the ability of public authorities to respond, potentially saving lives and mitigating the impact of disasters.

Fairer data sharing practices

The law protects European companies, especially SMEs, from unfair, one-sided practices in data sharing contracts. This will be reinforced by European Commission standard contractual clauses, making data sharing agreements more transparent and fairer.

Easier change of cloud provider

Customers will have the freedom to switch cloud service providers and transfer data freely. This reduces lock-in to a particular provider and encourages competition in the market, which can lead to better services and lower costs. From January 2027, this switching process will be free of charge.

Promotion of interoperability

The law promotes the development of general standards for the shared use and processing of data.

Risks

Data protection risks

Sharing data carries the risk of data breaches and unlawful access to sensitive information.

Legal complexity

Companies have to deal with a multitude of legal requirements, which can lead to complexity and uncertainty.

Loss of control

Sharing data can lead to companies losing partial or complete control over their information.

Inadequate infrastructure

Inadequate infrastructure can lead to a lack of data accessibility, poor interoperability and limited security measures that hinder the seamless exchange of information. This leads to inaccurate analysis, limited collaboration and privacy concerns.

Technical aspects of data sharing

The technical sharing of data between companies requires a robust infrastructure to ensure that the transferred information is transmitted securely and efficiently. Factors such as data formats, protocols, security standards, and interoperability play a crucial role here.

Another important aspect is to anonymize personal or sensitive data for sharing without compromising its quality and utility for analytics. For this, you will need the right tools that use appropriate data anonymization techniques, such as data masking, pseudonymization, generalization or data swapping, and additionally allow you to automate the process of anonymizing large data sets.

Effective data sharing often requires integration of systems to ensure seamless communication between different platforms. Companies need to ensure that their IT infrastructure is up to date to avoid potential data leaks and security breaches.

Data sharing: Industry-specific use cases

Large-scale data sharing is already taking place in various industries around the world. Here are some examples:

Healthcare and pharmaceuticals

• Research and clinical trials: Pharmaceutical companies and research institutions share data on clinical trials, patient data and research results to accelerate progress in drug development.
• Health data platforms: Platforms that collect and analyze health data enable the exchange of anonymized patient data between hospitals, physicians, and research institutions.

Financial services

• Fraud detection: Banks and financial institutions share data to detect fraud and take preventive action.
• Credit risk assessment: Credit data is exchanged between banks, credit card companies and other financial institutions to make accurate credit risk assessments.

Retail and e-commerce

• Supply chain optimization: Retail companies share data along the supply chain to optimize inventory management, improve demand forecasting and shorten delivery times.
• Customer behavior analytics: E-commerce platforms share data about customers’ online behavior to generate personalized recommendations and improve the shopping experience.
• Fraud prevention: Shared customer data between an online marketplace and a payment processing company can help prevent fraud and make transactions more secure.

Science and research

• International research collaborations: Research institutions worldwide share data for large scientific projects such as particle physics experiments or climate research.
• Open access publications: Scientific communities promote the open exchange of research results through open access publications and open databases.

Logistics and transportation

• Telematics data: Logistics companies use telematics data to share real-time information about the location of vehicles, the condition of goods and supply chain efficiency.
• Traffic data: Cities and transport authorities share traffic data to optimize traffic flows, minimize congestion and improve urban mobility.

These examples show that data sharing is already an integral part of business processes in various industries and helps to drive innovation, increase efficiency, and tackle complex challenges. However, data protection and legal compliance must always be taken into account in order to maintain the trust of stakeholders and minimize potential risks.

Conclusion

Data sharing between companies has both advantages and disadvantages. On the one hand, data sharing offers immense opportunities for innovation and efficiency, but on the other hand, it also requires great efforts to overcome technical and legal challenges.

Careful handling of data and the implementation of effective security measures are crucial. Companies need to strike a balance between striving for collaboration and protecting their data interests in order to fully exploit the benefits of data sharing.

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