Among the more commercially impactful aspects of the EU Data Act is its stance on switching charges — the fees imposed by cloud providers when customers wish to move to another provider or environment. These charges, which can include early termination fees, data export costs, and other technical switching-related activities, are set to be phased out over the coming years.
During the three-year transition period, ending 12 January 2027, providers may continue to impose switching charges, but only where the costs are directly incurred in facilitating the switch. Charges must be transparent and agreed in advance, with no hidden fees or indirect penalties. After that date, all switching charges, including data egress fees, will be prohibited under EU law.
This is a clear regulatory move to eliminate lock-in by removing the financial barriers that often deter customers from changing providers. However, certain costs remain outside the scope of the ban. These include:
- Standard service or subscription fees, which are not classed as switching charges;
- Proportionate early termination fees in fixed-term contracts;
- Charges for additional support, where agreed upfront;
- Costs for services beyond the regulatory switching scope, such as handling non-exportable data or bespoke technical tasks.
A key nuance is that the ban does not apply to in-parallel use (multi-cloud). In these scenarios, data egress is often continuous and bi-directional, so the Act permits charges for these ongoing processes. Recital 99 of the Act makes this clear.
From a commercial perspective, the industry may respond by adjusting baseline pricing models. Some providers may increase standard service fees or restructure their commercial offers to recover costs that can no longer be charged separately. However, any such adjustments will need to be transparent and proportionate and will still be subject to general obligations of good faith and transparency under the Act.
For cloud vendors and their legal advisors, the next 18 months present a critical window to assess pricing structures, review switching-related clauses in customer agreements, and ensure full alignment with the Data Act. Contracts signed today may well still be in place in 2027 and must be future-proofed accordingly.
This article is based on insights shared during our recent webinar, EU Data Act and Cloud Services: CTRL + ALT + Switch? If you would like to know more about what the Act requires or request a copy of the webinar recording, please do get in touch.
