Cloud Portability and Interoperability under the EU Data Act: Dynamism versus Equivalence

Abstract

This paper examines the provisions of the EU Data Act relating to cloud portability and interoperability through a joint economic and legal lens. The cloud industry is characterised by dynamic competition for the market underpinned by high levels of service innovation and customisation. We find that insufficient thought appears to have been given to the potential implications of these provisions, which envisage relatively static competition between 'equivalent' services, pursue standardisation and unbundling and introduce mandatory contract law. We suggest that the minutiae of the definition of 'equivalence' are quite different from portability and interoperability rules for simple products due to feature complexity and ongoing innovation. While a certain level of portability and interoperability are natural and essential for customers, the breadth of net cast by 'equivalence' could yield unintended consequences that not only lead to operational challenges but even product simplification to a lowest common denominator, reducing availability of the cloud computing service variety that customers seek. Overall, we are concerned that the EU Data Act may disincentivise innovation, harm smaller providers and strengthen the position of incumbents. We propose a way forward that seeks to protect and stimulate dynamic competition and innovation in the EU market for cloud computing services.

Keywords: data, portability, interoperability, cloud, switching, K20, L51, L86, O31

JEL Classification: K20, L51, L86, O31