We study how mandated access to machine-generated data and royalty regulation affect innovation incentives and market outcomes. The EU Data Act grants users the right to share non-personal data with third parties and imposes a fair, reasonable, and non-discriminatory (FRAND) constraint on royalties. We analyze a setting in which a manufacturer sells a connected product, and chooses whether and how to invest in a related data analytics service attached to the base product. The data analytics service may also be provided by a third party, who also chooses how much to invest. We consider both the case in which the third party’s service is an add-on to the manufacturer’s, and the case in which the third party’s service is a replacement, rendering the manufacturer’s service obsolete. We show that the manufacturer has no incentive to block access, even absent regulation. However, the effect of royalty regulation is more nuanced, as the third party’s quality investment is not always decreasing in the royalty rate. For intermediate cost levels, higher royalties induce the manufacturer to lower his price, incentivizing the third party to increase his quality. This non-monotonicity implies that FRAND regulation may reduce welfare in the case the third party provides an add-on, but may improve consumer surplus in the case the third party provides a replacement. Our results suggest that the Data Act’s access mandate may be an excessive regulation intervention, while royalty regulation plays a more significant role and must be carefully tailored to the market structure.