Joris DeeneThe SaaS market (Software as a Service) is about to undergo a profound transformation. Satya Nadella, CEO of Microsoft, recently suggested that most SaaS applications are essentially nothing more than an attractive interface on top of a database, and that artificial intelligence will fundamentally disrupt this market.
This observation aligns with a broader trend we see developing in the software world. Traditional SaaS applications, which many believe are going through their first existential crisis, may give way to what is now called "Deep SaaS.
What exactly is Deep SaaS?
Deep SaaS represents a new approach to software design and deployment. Instead of fully integrated suites, Deep SaaS focuses on essential basic services such as data storage, messaging (e-mail, push, SMS), workflow orchestration and complex analytics.
This evolution is enabled by composability - a concept in which atomic software services are orchestrated to achieve the desired result - and by agent-based AI. New protocols such as MCP (Model Context Protocol) facilitate communication between AIs and applications.
In the future, there would be no need to have user interfaces as we know them today. A simple voice command such as "prepare my year-end campaign inspired by what our competitor X did" would suffice. The AI on your device will deploy several agents working together to perform the task and present you with the results.
According to experts, this way of working could become common within three to five years. This is beneficial for producers of embedded AI in terminals, but less good news for traditional SaaS developers.
The legal implications of Deep SaaS
As this technological evolution unfolds, we must also consider its legal implications. To date, many AI system providers have not given serious consideration to legal constraints, such as intellectual property rights on content used and the use of personal data without providing transparency.
An important element here is a judgment of the Court of Justice dated October 4, 2024. In this ruling, the Court held that a company can bring a claim against a competitor for unfair trade practices for failing to comply with the General Data Protection Regulation (AVG) requirements. This creates a new legal risk for AI-driven solutions that ignore data protection laws.
The legal risks for noncompliance.
A company that fails to comply with the AVG can not only expect heavy financial penalties from data protection authorities (like the GBA in Belgium), but can now also face lawsuits from competitors for unfair competition.
The logic behind this is simple: a company that fails to comply with the AVG avoids the cost of compliance and therefore enjoys an unfair competitive advantage. Competitors can now challenge this through legal action.
Implications for Deep SaaS providers.
For Deep SaaS providers, this means not only innovating technologically, but also ensuring full legal compliance. This includes:
- Transparent processing of personal data
- Proper handling of intellectual property rights
- Compliance with the AVG and other relevant legislation
Ignoring these legal requirements can lead to double penalties: administrative fines as well as lawsuits for unfair competition.
A level playing field
These legal issues may also delay the replacement processes that experts predict. SaaS tools that are already compliant with legal requirements may have a longer lifespan than expected, as they are ahead of newer AI-driven alternatives in this area.
However, if SaaS providers also start using AI in their solutions without considering legal requirements, they will no longer be able to claim unfair competition.
Conclusion and advice for businesses
The shift to Deep SaaS represents an important evolution in the software market. However, companies following this trend must focus not only on technological innovation, but also on legal compliance.
Non-compliance with the AVG can now lead to double risks: sanctions from data protection authorities as well as lawsuits from competitors for unfair competition.
For companies operating in this sector, we recommend:
- Ensure full compliance with the AVG and other relevant legislation
- Be transparent in your data processing
- Respect intellectual property rights when using content for AI training
- Consider legal advice when developing AI-driven solutions
Our firm has expertise in both data protection and competition law, and is ready to guide you through this new, complex legal environment. Whether you are a traditional SaaS provider considering the transition to Deep SaaS, or a newcomer to this market, our specialists can help you minimize legal risks and pursue your innovation responsibly.
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