• CFRED CUHK Law

Demystifying the role of data interoperability in the access and sharing debate

Jörg Hoffmann - Max Planck Institute for Innovation and Competition;

Begoña Glez. Otero - Max Planck Institute for Innovation and Competition

-- In the on-going debate about data access, sharing and re(-use), data interoperability has been widely proclaimed as the holy grail for efficiently reaping the economic welfare-enhancing effects of further data re-use. Hitherto, interoperability has been the subject of a vivid scholarly debate since the end of the 1980s. Nowadays, in the middle of the international discussion about the right legal framework for a data-driven economy, it has gained traction. For instance, in Europe, all three European Commission (EC) Communications conforming the digital package published last February (see here, here and here) rate interoperability as one of the key aspects of their strategy.

With this in mind, our recent paper, “Demystifying the Role of Data Interoperability in the Access and Sharing Debate,” examines when and how data interoperability, as a precondition to data quality, should be addressed by the legislature. The first step to answer these questions passes by exploring the technical, legal and economic aspects of data interoperability, so as to conceptualize it within the data sharing debate. Interoperability comes with distinct degrees and has been differently addressed by, among others, portability rights and regulated access regimes. Interoperability is also on the table as a potential remedy against anti-competitive platforms’ behaviours. Technically, last but not least, one needs to be aware of the existence of different interoperability facilitators, i.e. data standardization and application programming interfaces (APIs).

The debate about APIs is still ongoing and brings with it central questions regarding the proper functioning of exclusive rights: To which extent do IPRs and trade secret protection hamper data interoperability? What would be the implications of granting IPR or trade secret protection for APIs, both in terms of raising incentives for their provision and with regard to effects on competition? Although some have proposed, as a default rule, the compulsory opening up of APIs, our take differs. Without building on market failure considerations, a mandatory opening-up rule negates potential utilitarian incentive considerations regarding the exclusivity and/or excludability of the information in connection with safeguarding the investment protection of firms. It also conditions innovation. Furthermore, the software industry and its dependent industries are closely watching the coming SCOTUS decision in the Google v. Oracle case. Copyrightability of APIs may indirectly affect competition policy in software-dependent markets worldwide.

Additionally, standardized APIs, working as plug-and-play, could inadvertently allow the API provider to get access to additional information from the party invoking the API, which would have adverse effects on competition.

Yet, the debate about data access requires more than a clarification of API protection. The current legal framework on data interoperability, as a technical mechanism, within data access and data portability regimes, is not straightforward. There is a need for a more normative approach. Such an approach will require the active disclosure of certain interoperability information to others.

Data interoperability is already an inherent part of some regulated data access rights (e.g. digital payments services and vehicles' RMI). In these cases, data interoperability is the key enabler for efficient (re-)use of data. This shows not only the relevance of addressing data interoperability within the corresponding obligation of the access right, but also reveals that interoperability becomes key from a market failure perspective if it stems from a lack of efficient data use or potential lock-ins. Simply outlining a privately enforceable obligation to share information in a processable, electronically readable and interoperable format may alleviate but not solve data lock-in scenarios. From a legal policy perspective, a common understanding of data interoperability in a specific legal context is highly desirable. This will help to clearly outline the scope of data interoperability and provide for a more coherent delineation of data access regimes when interpreted by courts.

Another example where data interoperability goes hand in hand with access to data is the case of digital platforms. There seems to be a broad consensus among governmental (see e.g. here and here) and academic studies (see here and here) that the inclusion of asymmetrical interoperability obligations for dominant platforms (gatekeepers) could help to correct market foreclosures and information asymmetries. This seems to be the approach followed by the EC in the Digital Services Act package.

Indeed, the current EC’s ambition to pave the way towards European digital sovereignty highly depends on the design of a data interoperability policy. However, technology may already govern data access and data sharing without legal intervention. If legal intervention takes place, it may affect the enforcement of the access right. Yet considering interoperability as a goal and not as a means to an end, comes at the risk of turning interoperability into another example of Lessig’s “code is law.”

Demystifying the role of data interoperability in access and sharing regimes is a Sisyphus work. Additionally, one should keep in mind that neglecting the issue of data interoperability on a multi-lateral level may have potential negative effects for international firms – despite current claims for a digital sovereignty of the EU or other States.

For now, EC legislative policy seems to focus on flexible regulatory approaches. Member States’ initiatives such as Gaia-X or data trusts look like good examples of how to achieve high levels of semantic data interoperability (increasing data quality) and foster data sharing with the use of data standards.

However, if legislatures wants to avoid postponing action until it becomes urgent, we propose a parallel action. On the one hand, data interoperability clarification needs to be addressed better when regulated data access rights are outlined. This should be complemented by a public law approach within the realm of a data governance regime. Such governance approach should involve a more consistent solution to conflicting IP, database sui generis and trade secrets protection in data. It should consider the question of potential re-usability of data and it could also provide for efficient solutions re data security, data protection (in case personal data is involved) and the disclosure of APIs information. All these conflicts require a holistic evaluation of overlapping exclusive rights in which the positive effects of exclusivity and excludability (i.e. investment incentives, source for dynamic efficiency and more innovation-stimulating competition) are taken into account.

You will find our piece in the next JIPITEC issue (winter), but for now, you can read the pre-print here.

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