The European Union is pursuing an ambitious digital policy project: create a unified data economy imbued with European values under European governance. Launched in 2020, the European Strategy for Data aims to build a “single European data space.” The integrated digital system would allow individuals, businesses, and governments to share vast troves of industrial, government, and personal data across borders and sectors: “A genuine single market for data, open to data from across the world” operating under Europe’s rules.

The EU imagines data as infrastructure—a resource to be shared, not held by private companies or siloed in national jurisdictions. Its strategy is sweeping and highly structured. It starts by building sector-specific data spaces—such as for health, energy, and transportation—designed to eventually interconnect under a unified framework. The Data Spaces Support Centre, created in 2022, coordinates these efforts. The Centre is to ensure data space coherence and interoperability. The EU is financially backing over 50 data-space-related initiatives.

To implement its strategy, the EU has adopted two cornerstone laws. The Data Governance Act, which took effect in 2023, governs how public-sector and protected data (including personal and commercially sensitive data) can be reused. It also lays the legal groundwork for the data spaces.

The Data Act, set to apply starting in September 2025, is even more ambitious. It mandates that providers of “connected” products—devices that generate, obtain, or collect data, ranging from smart thermostats to industrial sensors—and cloud services to give users easy, real-time access to the data those devices generate. “Users” spans consumers and businesses, including competitors to the companies providing the products. Consumers get the data for free, as do some businesses. The Data Act obligates companies that hold such data to share it with third parties upon user request, under terms that must be “fair, reasonable and non-discriminatory.”

Although companies are not strictly required to contribute data to EU data spaces, these spaces are the preferred framework for sharing, and the vision is for a single data market and a single data space. Notably, the Data Act explicitly prohibits “gatekeepers”—a designation under the EU’s Digital Markets Act that includes no European companies—from accessing data under the new rules. US tech leaders Alphabet, Amazon, Apple, Meta, and Microsoft, as well as China’s ByteDance, are excluded. The EU’s reasoning is that these companies have gained prominence “in the digital economy through the accumulation and aggregation of vast volumes of data” and must be handicapped because European “operators are unable to challenge or contest” their services.

The European Strategy for Data is motivated by the EU’s desire for “digital sovereignty”—the ability to act independently from the rest of the world in the digital domain. European officials believe the continent is falling behind the United States and China in key areas such as AI adoption, quantum computing, and digital infrastructure. They believe their regulatory model will enable Europe to catch up by fostering innovation and economic development. The EU estimates that its data strategy could enable adding €197 billion to its GDP by 2028.

According to one EU panel, while nearly every organization collects data, only a small number of mostly American firms hold the vast majority of useful datasets. The EU wants more of that data to be accessible to others.

These laws are part of a complex, and sometimes contradictory set of European policies intended to weaken today’s large tech companies. Perhaps recognizing that the complexity is also damaging Europe’s economy, the commission is preparing a Data Union Strategy to streamline rules and address cross-border data flows.

As I will explain more fully in a subsequent essay, the European Strategy for Data will not yield the success Europe desires. The strategy’s top-down, highly structured system will fall behind in today’s fast moving, dynamic digital markets. It’s European-centric system will either isolate European businesses or put them at a cost disadvantage when they try to operate outside of Europe. Instead of trying to control the engines of innovation, Europe should trust that its entrepreneurs and other business leaders could compete with the world’s best if they were less regulated.

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