The Big Change
From 12 September 2025, the EU Data Act (Regulation (EU) 2023/2854, COM/2022/68) will reshape how SaaS, PaaS, and IaaS providers handle contracts in Europe. Customers will be able to exit a contract with only two months’ notice — even if the deal was signed for several years.
This applies to all providers selling into the EU, not just EU-based companies (Scope of application: Data Act, Chapter VI). By 12 January 2027, providers won’t be allowed to charge switching fees at all (Article 30).
The purpose is clear: make switching between providers “free, fast, and fluid” to eliminate vendor lock-in and create more competition (Purpose of facilitating customer switching, Article 23).
- 11 January 2024 → The EU Data Act entered into force (Official start date, Regulation (EU) 2023/2854).
- 12 September 2025 → Switching and portability obligations apply.
- Customers can terminate contracts with a maximum of two months’ notice.
- Applies to new and existing contracts.
- Providers must enable data export and make switching technically feasible.
- Proportionate early termination penalties are still permitted.
- 12 January 2027 → Switching fees banned.
- Providers may no longer charge customers for switching.
- Only exception: direct costs where parallel running (temporary overlap of services) is required.
Customers also gain stronger rights around functional equivalence when moving to a new provider.
Why This Matters for SaaS Leaders
Contracts Lose Their Stickiness
Multi-year commitments no longer guarantee revenue security. A three-year deal can end after just six months if a customer decides to leave. Discounts tied to long contracts become meaningless unless they are fully prepaid (Mandatory contract clauses, maximum 2-month notice – Article 23).
Forecasting Gets Harder
Finance teams can’t treat contract revenue as fully accrued anymore. Customers may cancel mid-term, meaning that ARR projections must factor in higher churn risk. This shifts the way CFOs forecast and report, moving from guaranteed recognition to churn-adjusted models (Conditions for terminating the contract, Article 23).
Sales and Customer Success Must Realign
Sales leaders lose the protection of lock-in clauses. Growth will depend on customer success and ongoing product value, not legal restrictions. Providers are also legally required to ensure data export and switching are technically feasible (Articles 23–30).
Looking Ahead: Three Big Shifts
- Customers Win
Lock-in is gone. Customers can test competitors more easily and demand higher standards. Providers must guarantee functional equivalence when a customer switches to a new service (Article 30(1)). Great onboarding and product experience will become baseline expectations.
- SaaS Must Run Leaner and Deliver More
With less revenue certainty, companies must focus on efficiency and retention. Leaner ops, automation, and continuous delivery of value will be the new normal.
- PLG Becomes the Winning Motion
The sales-led model (big discounts + lock-in) loses its advantage.
- Product-Led Growth (PLG), where customers actively want to pay for higher tiers because they love the product, becomes the better strategy.
The New Survival Skill: Customer Observability
The Data Act makes churn risk higher. To survive, SaaS companies must understand customers deeply through data:
- Onboarding flows → early signals of whether customers are satisfied (Transparency obligations, Article 30(3)).
- Usage data → identify what a “happy customer” looks like.
- Predictive churn models → move from reactive cancellation management to proactive customer success.
Final Thought
The EU Data Act is not just a compliance issue, itʼs a structural change to SaaS economics. By 2027, switching will be effortless and free.
The winners will be those who:
- Shift to prepaid contracts with clear terms.
- Build offboarding enablement into their customer success strategy.
- Double down on PLG and value delivery.
- Master data-driven churn forecasting by aligning processes, data and people.
Customers now have the power to leave. The best SaaS companies will make them want to stay.
Further Resources on the EU Data Act
- EU Data Act: Articles & Commentary – EU-Data-Act.com
- Proposal for a Regulation of the European Parliament and of the Council (COM/2022/68) – EUR-Lex Initial Legislative Draft
- Data Act 101 – IAPP Resource
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