When a data holder is required to provide data access to a data recipient under the EU Data Act, a fundamental commercial question arises: can the data holder charge for that access, and if so, how much? The regulation’s answer to this question draws on a concept with deep roots in intellectual property and telecommunications law: the FRAND standard, which stands for Fair, Reasonable, and Non-Discriminatory. For US companies building data-sharing programs for the European market, understanding how FRAND pricing works in the Data Act context — and how it differs from its applications in patent licensing and telecommunications — is essential to pricing your data products lawfully and sustainably.

FRAND is not a price schedule. It is a legal standard that governs the pricing process, constrains its outcomes, and provides the basis for challenging prices that fall outside its bounds. Getting FRAND pricing right requires understanding who it applies to, when compensation is permitted at all, what factors determine a fair and reasonable price, and what the non-discrimination obligation means in practice.

When Compensation Is Permitted

The first and most important threshold question is when the Data Act permits compensation at all. The regulation draws a clear distinction between different categories of data access obligations.

When a data holder makes data available to the user of the connected product — the person or organization that bought or uses the device — no compensation is permitted. The user’s right of access is a baseline entitlement that flows from the user’s relationship with the product. A manufacturer cannot charge its own customers a fee to access the data generated by the customer’s use of the manufacturer’s product. This is not subject to negotiation: it is a statutory right, and the data holder must provide access without payment.

When data is shared with a third party at the user’s direction under Article 5, the same no-compensation rule applies, at least in principle. The user instructs the sharing; the user has a right to that sharing; the third party receives data as a consequence of the user’s entitlement. Imposing a charge for this sharing would effectively create a toll road between the user and their data.

Compensation becomes relevant — and where the FRAND standard applies — in B2B data access scenarios. When a data holder and a data recipient are negotiating independent commercial arrangements for data access beyond what the user’s direct right of access requires, compensation may be charged. This includes scenarios where a business customer wants access to aggregated data, where a service provider wants a data feed for commercial analytics purposes, or where an independent data product is being built on top of a manufacturer’s data stream. In these commercial B2B arrangements, the FRAND standard governs the pricing.

The FRAND Standard: What It Requires

FRAND pricing is a three-part standard, and each element is independently meaningful.

Fairness

A fair price is one that reflects the actual value of the data to the recipient and the actual cost to the holder of providing it, without exploiting the holder’s structural advantage as the sole source of the data. Fairness is an equitable concept: it asks whether a neutral third party, looking at the terms of the arrangement, would conclude that neither party is being taken advantage of. A price that is fair accounts for both sides of the exchange — it is not simply the maximum price the market will bear, nor is it a price so low that it fails to reflect the genuine value of the data.

Reasonableness

A reasonable price is one that is objectively justifiable by reference to the relevant factors: the cost of collecting, storing, and transmitting the data; the investment made in generating the data through product development and operation; the commercial value the recipient can extract from the data; and market comparables where they exist. Reasonableness is a more technical concept than fairness — it invites the kind of quantitative analysis that economists and valuation experts apply in comparable licensing contexts.

In patent licensing, where FRAND originated, reasonable royalties have been calculated using a variety of methodologies: the Georgia-Pacific factors developed by US courts, the hypothetical negotiation framework, and comparable licensing benchmarks. EU competition authorities have applied similar methodologies in standard-essential patent cases. The Data Act does not adopt any of these methodologies by name, but the body of FRAND jurisprudence in intellectual property law provides the closest available analog for the quantitative analysis that a reasonableness assessment requires.

Non-Discrimination

The non-discrimination component of FRAND requires that a data holder charge similarly situated recipients the same price — or at least apply the same pricing methodology to them. A data holder cannot charge one recipient a premium for equivalent access that it provides to a favored recipient at a lower rate, unless there is an objective justification for the difference.

Non-discrimination does not mean identical pricing in all circumstances. Recipients with different scale of usage, different technical integration requirements, different levels of commercial risk, or materially different purposes may justify different prices. But the differences must be driven by objective, verifiable factors — not by the data holder’s preferences, competitive concerns, or desire to favor one commercial relationship over another. A pricing structure that has the effect of systematically disadvantaging a class of recipients without objective justification will violate the non-discrimination requirement.

Lessons From Patent Licensing FRAND Jurisprudence

Because FRAND pricing is a new concept in the data access context, there is limited precedent directly interpreting the Data Act’s compensation rules. The most developed body of FRAND jurisprudence comes from standard-essential patent (SEP) licensing, where patent holders who have committed to license essential technologies on FRAND terms have been extensively litigated against.

From SEP cases, several principles have emerged that are likely to be influential in the Data Act context. First, courts and arbitral tribunals have consistently rejected both extremes: prices that are so high as to be effectively exclusionary and prices that fail to provide adequate return on investment. The FRAND zone is a range, not a single number, and parties have latitude to negotiate within that range.

Second, the comparable license method — asking what similarly situated parties have paid for comparable access — is treated as the most reliable indicator of a FRAND price where comparables exist. In the data access context, this creates an incentive for early market participants to establish pricing benchmarks that will anchor future negotiations and disputes. If you are among the first companies providing data access arrangements under the Data Act, your pricing decisions will influence the market benchmark.

Third, the royalty base matters. In patent licensing, courts have insisted that royalties be calculated on the value attributable to the patented contribution, not on the total value of the product that happens to use the patent. In data access pricing, this principle suggests that the price should reflect the value of the specific data being provided, not a rent extracted from the recipient’s entire business on the theory that the data is foundational to it.

Fourth, transparency in pricing methodology is treated as evidence of FRAND compliance. A data holder who can document how it calculated its price — the cost inputs, the value assessment, the comparables considered — is in a much stronger position in any challenge than one who simply announces a price and offers no explanation.

The SME Special Rules: Compensation Capped at Cost-Plus

The FRAND standard applies in its full form to B2B data access arrangements where both parties are large commercial entities. When the data recipient is an SME — a micro, small, or medium enterprise under the EU definition — the Data Act imposes a more specific and more restrictive pricing rule: compensation is capped at the cost of making the data available, plus a reasonable return.

This cost-plus cap is a significant constraint. It means that a data holder cannot charge an SME recipient a price that reflects the full commercial value of the data to the recipient’s business. The price must be anchored to the holder’s own costs, with only a reasonable return added on top. The holder’s expected margin on the data transaction with an SME is therefore fundamentally different from what it might charge a large enterprise recipient for equivalent data.

The rationale for the SME special rule is structural. SMEs lack the bargaining power to resist above-cost pricing, and the Data Act’s drafters concluded that allowing large data holders to charge SMEs market-rate prices for data access would effectively price smaller businesses out of the data economy. The cost-plus cap is intended to ensure that SMEs can participate in data markets on economically viable terms.

Calculating the cost of making data available requires identifying and documenting the actual costs the holder incurs in connection with the specific data access arrangement: data collection and storage infrastructure costs attributable to the data being provided, data processing and quality assurance costs, transmission costs, technical integration and API maintenance costs, and compliance costs associated with the arrangement. Overhead allocations are permissible but must be reasonable and defensible.

The ‘reasonable return’ component allows the data holder to cover its investment and make a profit, but the profit margin is constrained by the word ‘reasonable.’ A return that is consistent with the holder’s overall cost of capital and that reflects the risk profile of the data access business is likely to be reasonable. A return that captures the full commercial value of the data to the SME recipient is not.

How to Calculate a FRAND Price in Practice

The absence of detailed regulatory guidance on FRAND calculation methodology under the Data Act means that companies need to develop their own frameworks, informed by the principles discussed above. A practical approach to building a defensible FRAND pricing model involves several steps.

The first step is cost accounting. Identify and document the full cost of the data access arrangement, including infrastructure, processing, transmission, integration, and compliance costs. This serves two purposes: it establishes the floor for SME pricing (cost-plus) and it provides an important input for the full FRAND analysis (since even full FRAND prices should generally exceed the holder’s costs).

The second step is value assessment. Analyze what the data is worth to the category of recipient you are pricing for. This requires understanding what services or products the recipient will build with the data, what revenue they might derive, and what the data contributes to that value. A consulting firm using manufacturing telemetry to build performance benchmarking services for industrial clients is getting a different kind of value than an insurance company using the same data to underwrite equipment risk — and the pricing analysis should reflect that difference.

The third step is market comparison. Look for comparable transactions: what have similar data holders charged for similar data? What do industry licensing rates look like in adjacent contexts? Even imperfect comparables provide anchors that are more defensible than hypothetical valuations.

The fourth step is discrimination testing. Before finalizing pricing for a specific recipient, apply the same pricing methodology to other recipients in comparable situations and verify that the outcome is consistent. Divergent pricing outcomes for similarly situated recipients should be explicable by reference to objective factors — if they cannot be, the pricing methodology needs adjustment.

What Happens When FRAND Pricing Is Disputed

If a data recipient challenges the compensation terms offered by a data holder as non-FRAND, the dispute resolution pathway depends on whether the parties can negotiate a resolution and, failing that, on national enforcement mechanisms. The Data Act requires member states to establish out-of-court dispute resolution mechanisms for data access disputes, which may include mediation, expert determination, or arbitration.

In judicial proceedings, a challenge to FRAND pricing would typically involve expert economic evidence on valuation, comparable license analysis, and cost accounting. Courts in EU member states have limited experience with data access pricing disputes specifically, but the frameworks from SEP litigation provide a developed procedural toolkit that is likely to be adapted to this new context.

Data holders who face a pricing challenge are in a much stronger position if they have documented their pricing methodology contemporaneously. A pricing decision that was made on a reasoned, documented basis — with cost analysis, value assessment, and comparables review — is defensible even if a reviewing authority ultimately concludes that a different number would also have been within the FRAND range. A pricing decision that was made without documentation, or that appears to have been driven by competitive motives rather than value analysis, will be difficult to defend.

Strategic Implications for US Companies

The FRAND pricing framework has strategic implications that go beyond compliance. It creates a legal architecture that favors data access over data exclusivity, and it makes it more difficult to use data pricing as a competitive weapon against recipients you would prefer not to have in the market. If you are required to provide data access on FRAND terms, you cannot price a potential competitor out of the market by offering data at commercially unviable rates.

This constraint does not eliminate competitive differentiation through data strategy. You can still provide superior data quality, better technical integration, richer documentation, and stronger service-level commitments to preferred recipients — as long as the pricing structure itself is FRAND. The regulation governs price; it does not require homogeneity of service.

For US companies building data product businesses in Europe, the SME pricing cap creates a structural challenge: the most numerous category of potential recipients is subject to a pricing constraint that limits revenue per customer. Building a sustainable European data business requires either a large volume of SME customers at modest per-unit margins, a smaller number of large enterprise customers at full FRAND rates, or a product architecture that differentiates between the underlying data access — which is FRAND-constrained — and value-added analytical services built on top of that data, which may command premium pricing.

The Data Act’s FRAND framework is still new, and its specific application to data access pricing will develop through regulatory decisions, court judgments, and market practice over the coming years. Companies that invest now in rigorous cost accounting, transparent pricing methodology, and non-discrimination monitoring will be better positioned to adapt as that practice develops, and better insulated against the pricing challenges that will inevitably arise as the data economy matures under the new regulatory framework.