A European law now shapes how customers can leave cloud and software-as-a-service (SaaS) products, and the most visible part of it, the end of switching charges, arrives on 12 January 2027. This article explains what the rules cover, what they leave open and how both buyers and product teams can prepare.
What is the Data Act, and why does it touch SaaS?
The Data Act is a European Union regulation about who can access and use data generated by connected products and digital services. According to the European Commission, it entered into force on 11 January 2024 and has applied since 12 September 2025.
Most of the attention goes to connected devices, but one chapter deals with what the Commission calls data processing services: cloud and edge computing, including platform-as-a-service (PaaS), infrastructure-as-a-service (IaaS) and SaaS. The Commission describes the goal as tackling vendor lock-in, so that moving between providers is meant to become fast, free and technologically fluid.
Vendor lock-in is the situation where leaving a supplier is so costly or difficult that customers stay even when a better option exists. Anyone who has tried to extract years of records from a tool they have outgrown knows the feeling.
What does the law actually require of SaaS providers?
The Commission’s explainer sets out several obligations in plain terms:
- Open interfaces and export. For PaaS and SaaS, providers must offer open interfaces and, at a minimum, let customers export their data “in a commonly used and machine-readable format.”
- No obstacles. All providers must remove obstacles to switching, or to using several services at the same time.
- Contract transparency. The Act sets minimum requirements for the content of cloud contracts, which gives customers, public and private, clearer terms.
- Comparable results for infrastructure. For IaaS, providers must help customers get materially comparable results for shared features when moving to a service of the same type.
An interface in this context is the defined way one piece of software talks to another. If that idea is new, how APIs connect the software you use explains the basics. A machine-readable format is simply one that software can parse reliably, such as a structured spreadsheet or data file, rather than a screenshot or a locked report.
When do switching and egress charges disappear?
The Commission states that switching charges, including data egress charges, are removed entirely from 12 January 2027. Egress charges are fees for moving data out of a provider’s systems. The Commission also notes that during a transitional period of about three years from entry into force, providers may still charge for switching and egress costs.
| Date | What applies, per the European Commission |
|---|---|
| 11 January 2024 | Data Act enters into force |
| 12 September 2025 | Data Act applies |
| Until 12 January 2027 | Providers may still charge for switching and egress costs |
| From 12 January 2027 | Switching charges, including egress charges, removed entirely |
One point deserves care. Commission material describes the end state as switching that is eventually free of charge, so the fee waiver is a scheduled change, not an immediate one. Buyers renewing contracts today may still see switching or egress terms that reflect the transitional period.
What stays outside the headline?
The Commission pages reviewed here do not spell out every detail, and several questions are better answered by the legal text and by counsel than by a summary. For instance, the explainer does not specify maximum notice periods or transition timeframes. It also does not say how ordinary subscription fees, early termination terms or paid extra services should be treated.
Anyone relying on a specific point should check the regulation text itself or take legal advice, and product teams should watch official channels for guidance and any later changes rather than assume every detail is settled.
Does this matter if you are not in the EU?
Possibly, in two ways. First, a SaaS company that sells to customers in the EU will generally need to design for these rules regardless of where it is headquartered. Second, products tend to ship one export feature, not one per region, so improvements made for European customers often reach everyone.
Buyers elsewhere should not assume the law protects them. The rights discussed here come from EU legislation, and the way they apply to a particular contract depends on who the customer is and which services are involved. Treat the rules as a useful benchmark for what to ask for, not as a guarantee.
How should buyers use this when choosing a tool?
Switching rights make one old piece of advice more concrete: test the exit before you commit. The checklist in how to evaluate a SaaS tool before you commit already treats data export as a core question. The Data Act adds specific things to check:
- Which formats are offered? Confirm that exports are structured, complete and readable by other software.
- What is included? Records, attachments, history, settings and relationships between items can matter as much as the headline data.
- What do the terms say about charges? Look for any fee linked to export or switching, and how it is expected to change after 12 January 2027.
- Is there an interface for bulk transfer? A one-off download button is different from a reliable programmatic route.
- What happens to your data afterward? Ask how and when copies are deleted once you leave.
A worked example in illustrative numbers
Suppose a company pays $48,000 a year for a SaaS product, and leaving would trigger a one-time $6,000 charge for data extraction. That fee equals 12.5 percent of a year’s subscription ($6,000 divided by $48,000). A rival product that costs 8 percent less would save about $3,840 a year ($48,000 times 0.08), so the first year would still be $2,160 worse off after paying the exit fee ($6,000 minus $3,840), and the move would only break even in the second year. If the exit fee is removed, the same switch saves money immediately, before counting the effort of migration. The figures are invented to show the logic, but the pattern is real: exit costs tilt decisions toward staying put.
What should SaaS builders do now?
For product and engineering teams, the rules turn data portability from a nice-to-have into a design requirement. Practical steps include:
- Map what customers would need to leave. List every object a customer creates, and check that each can be exported in a documented, machine-readable form.
- Offer a real interface. Provide an open, documented route for bulk export, not only manual downloads.
- Review contracts and pricing pages. Remove or rework any language that attaches charges to leaving, and make the process for switching plain.
- Plan for the revenue effect. If customers can leave more easily, the product has to earn renewals on value. That connects directly to how teams think about SaaS churn and to how SaaS pricing models work, since pricing that relied on friction rather than value becomes riskier.
Good portability can also be a selling point. A buyer who is confident they can leave is often more willing to start.
Is easier switching bad for SaaS companies?
Not necessarily. Lock-in protects revenue in the short term but breeds resentment, and the strongest retention comes from customers who stay because the product keeps solving their problem. Easier exits can also lower the perceived risk of signing up, which helps acquisition, especially among cautious buyers and smaller firms.
The harder adjustment falls on companies whose retention depended mostly on the pain of migrating. For them, the new rules make it urgent to understand why customers really stay.
Preparing for January 2027
The practical message is straightforward: the cost of leaving a cloud or SaaS product in the EU is scheduled to fall to zero in terms of switching and egress charges, and export in open, machine-readable formats is a legal baseline. Buyers can use that to negotiate and to test vendors, and builders can use the time before 12 January 2027 to make portability a strength.
Details of the law are still being interpreted, and some questions remain open. Read the regulation or seek advice where it matters for a particular contract.
This article provides general information only and is not legal, financial, investment or tax advice.
Sources: European Commission
