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The EU Data Act proposal (DA) seeks to introduce new rights for the users of internet of things (IoT) devices regarding access, use and sharing of the data generated through their use of these devices. This paper presents the results of a first analysis of the effectiveness of this 'user rights' mechanism from a 'law and economics' perspective. It concludes that the DA will not achieve its objectives of (a) empowering the users of IoT devices (especially the consumers), (b) unlocking large amounts of IoT data for innovation (for IoT-related services and across sectors), and (c) contributing to a fair sharing of the value from the generated IoT data. Although the DA correctly identifies the main problem arising from manufacturers' technical design of IoT devices, which grants them exclusive de facto control over the generated IoT data, its proposals for solving it are not close to being sufficient: (1) The proposed user rights mechanism suffers from manifold serious problems which will make it weak and largely ineffective (insufficient scope of data; lacking technical interoperability; high transaction costs, especially through the need for a negotiated contract with FRAND conditions; unclarity regarding data markets). (2) Also, the option for users to gain more control over the use of the IoT data, which operates through the requirement that the data holders can only use the IoT data on the basis of a contract with the users, will not work due to unsolved serious market failure problems in B2C situations. Therefore, all the rights to use the IoT data will end up with the data holders (and leave the consumers with only these weak user rights). The main reason for this negative assessment of the DA is its overemphasis on the protection of the exclusive de facto control position of the data holders. However, it is very doubtful whether in the case of IoT devices, whose price can cover the costs of data generation, any general incentive problem for investing in data-generating IoT devices exists. Therefore, a far-reaching rebalancing in favor of easier and increased data sharing and user empowerment is necessary, especially for enabling more innovation in the data economy. [ABSTRACT FROM AUTHOR]

To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-6435.2008.00412.x Byline: Wolfgang Kerber (1), Roger Van den Bergh (2) Abstract: SUMMARY The principle of mutual recognition is almost universally acclaimed for removing barriers to trade, for enabling regulatory competition, and for preserving scope for regulatory autonomy instead of embarking on a path to harmonisation and centralisation. By using economic theories of legal federalism and regulatory competition, this paper shows that mutual recognition leads to a number of inconsistencies, which question its suitability as a conflict of law rule that guarantees a stable allocation of regulatory powers within a two-level system of regulations. Mutual recognition should be understood more as a dynamic principle, which triggers a reallocation of regulatory powers between different jurisdictional levels. It leads either back to the country of destination principle, to a free market for regulations, or to harmonisation. The European experience suggests that a regime of mutual recognition is primarily another path to convergence and harmonisation, instead of being an instrument that preserves decentralised regulatory powers or even regulatory competition. The welfare gains from achieving market integration should be balanced against the welfare losses of an inefficient allocation of regulatory powers. Author Affiliation: (1)Philipps-Universitat Marburg (2)Erasmus University Rotterdam