Data as a Service (DaaS) is becoming increasingly popular as organisations seek to unlock the value of data without incurring the overhead of managing and maintaining large data sets.
DaaS providers offer a range of data sets, from weather and financial data to social media feeds and government statistics, providing organisations with the data they need to make informed decisions and gain a competitive advantage.
This post introduces DaaS, describes the typical DaaS business model, and identifies its key legal issues. The post also considers why it’s crucial to have an agreement governing this service. Ultimately, you’ll feel comfortable having conversations about the topic and decide whether your business can take advantage of it.
What is DaaS?
“DaaS” refers to a cloud-based service model where third-party providers offer data—including text, images, sounds, and videos—on-demand to users over the internet.
DaaS enables organisations to access, manage, and utilise data without investing in costly infrastructure or employing dedicated personnel for data management.
Well-known DaaS providers
- Xignite is a company that makes financial data available to customers.
- D&B Hoovers provides customers with business data on various organisations.
- Snowflake is a cloud-based data warehousing platform that provides DaaS services, such as Snowflake Data Marketplace, which offers access to a wide range of data sets from various providers.
The business model
General overview
The business model involves a DaaS provider giving a customer access to data that it finds valuable.
Providers source this data from various organisations; for example, government agencies, research organisations, or private companies.
DaaS providers typically offer a web-based interface or API—a set of protocols and tools for building and integrating software applications that allow different software programmes to communicate with each other—that customers can use to access and retrieve the data they need.
The dataset can include structured data, like financial or demographic data, and unstructured data, such as social media feeds or sensor data. Sensor data refers to information collected by sensors, which are electronic devices designed to detect and measure physical phenomena, like temperature, pressure, light, sound, motion, or proximity.
How the model generates revenue
DaaS providers generate revenue by charging customers for access to the data. The payment models can be a subscription model, where customers pay a fixed fee for regular access to the data, or a pay-per-use model, where customers pay only for the data they consume.
Some DaaS providers also offer value-added services, such as data analysis, data integration, or data visualisation, to help customers make sense of the data they access. These additional services can be a significant source of revenue for DaaS providers.
The benefits of the DaaS business model
- Scalability: Providers can easily scale their operations to accommodate changing customer demands without investing in more infrastructure or resources.
- Cost savings: They can offer data at a lower cost than traditional data providers, as they can take advantage of economies of scale and lower overheads.
- Accessibility: DaaS makes it easy for customers to access and use data without needing specialised technical expertise or infrastructure.
- Innovation: DaaS can help drive innovation by making it easier for businesses to experiment with new ideas and business models.
The legal issues
DaaS raises several legal issues concerning data privacy, intellectual property, and liability. Here are some of the primary legal considerations for DaaS providers and users:
- Data privacy and security: Providers must comply with all relevant data protection laws and regulations. They must also have adequate safeguards to protect the confidentiality, integrity, and availability of the data they collect and process.
- Intellectual property: Providers must ensure they have the appropriate licenses and permissions to use and distribute the data they offer. They must also take steps to prevent unauthorised copying, distribution, or use of the data by their customers.
- Liability: Providers may be held liable for any damages or losses resulting from errors, omissions, or other issues related to the data they provide. So, they must have appropriate terms of service and liability disclaimers to protect themselves from legal action.
- Contractual issues: Providers and users must have clear and enforceable agreements outlining the terms of service, pricing, and data usage. The contracts should also address data ownership, confidentiality, and liability issues.
Overall, DaaS providers and users need to be aware of these legal issues and take steps to mitigate their risks.
DaaS agreements
It’s vital to have an agreement in place when dealing with DaaS. Why? Having an agreement ensures the provider and customer know their rights and responsibilities and helps prevent misunderstandings or disputes.
Typical topics dealt with in these agreements include:
- Data ownership: The agreement should clearly define who owns the provided data and who can use it. This is particularly important when the data provided is confidential or proprietary.
- Data usage: The agreement should outline how the customer can use the data, including any restrictions or limitations. This can help prevent data misuse, for instance, unauthorised redistribution or commercial exploitation.
- Liability and indemnification: The agreement should address issues related to liability and indemnification, including any limitations of liability or warranties offered by the provider. This can help protect both parties in disputes or legal matters.
- Security and privacy: The agreement should specify the measures taken by the provider to ensure the security and privacy of the data being provided, including measures such as encryption, access controls, and data backups.
- Termination: The agreement should outline the circumstances under which the agreement can be terminated, as well as the process for doing so. This can help both parties avoid any potential legal disputes or financial losses.
Actions you can take next
- Manage your DaaS relationships by asking us to draft a DaaS agreement for you.
- Ensure your DaaS agreements comply with applicable laws by asking us to review them.
- Navigate the platform risks of DaaS by asking us to draft an acceptable use policy.
- Comply with data protection law by joining our data protection programme.
