Innovative online platform scaling-up in the EU
Digital services in the EU currently have to deal with 27 different sets of national rules. Only the largest companies can deal with the resulting compliance costs.
What the new Digital Services Act changes:
- The same rules will apply in the entire Union and will be the basis of a large domestic market for digital services to grow and prosper. Cross-border digital trade in the single market is expected to increase up to 2%
- Small players will have legal certainty to develop services and protect users from illegal activities and they will be supported by standards, codes of conduct and guidelines
- Small and micro-enterprises are exempted from the most costly obligations, but are free to apply the best practices, for their competitive advantage
- Support to scale-up: exemptions for small enterprises are extended for 12 months after they scale past the turnover and personnel thresholds that qualify them as small companies
61% of respondents in a Eurobarometer survey said they have come across illegal content online, and 66.5% said they do not think the Internet is safe for users.
What the new Digital Services Act changes:
- Removing disincentives for companies to take voluntary measures to protect their users from illegal content, goods or services
- Businesses will use new simple and effective mechanisms for flagging illegal content and goods that infringe their rights, including intellectual property rights, or compete on an unfair level
- Businesses may also become ‘trusted flaggers’ of illegal content or goods, with special priority procedures and tight cooperation with platforms
- Enhanced obligations for marketplaces to apply dissuasive measures, such as "know your business customer" policies, make reasonable efforts to perform random checks on products sold on their service, or adopt new technologies for product traceability
SMEs and start-ups are dependent on large platforms’ terms and conditions as to how their content is ranked and advertised, and how their communication channels through platforms are moderated. Businesses don’t have access to data related to their consumers and stemming from their activity on a gatekeeper platform while since such data allows the business to adapt its market strategy. This is problematic for businesses in direct competition with a gatekeeper who can use such data to its own interest.
What the new rules change:
- The Digital Services Act will make the internal processes of online platforms more transparent, and allow more informed business decisions.
- The Digital Markets Act will give business access to certain data held by gatekeepers. They will also be able to choose among different platforms where to offer their services or products. They would also have an increased possibility to switch and combine services according to their needs.
A fair and balanced internal market
Gatekeepers sometimes play a dual role and favour their own services, leading to the exclusion of business users who are dependent on them to reach consumers. This reduces choice for the businesses, potentially undermines the quality of service and increases prices for consumers.
88% of businesses and business users encountered unfair trading conditions on large platforms, according to the outcome of the Open public consultation on a New Competition Tool.
Increased legal certainty for businesses
Gatekeeper platforms have the power to act as private rule-makers that can unilaterally impose terms and conditions on its business users.
What the new Digital Markets Act changes:
- Business users will know what to expect when dealing with gatekeepers.
- Gatekeepers will know the clear obligations applicable to them.
- Clearly-defined procedural rules will ensure quick decisions that will translate in speedy advantages for both business users and consumers.
Contestable markets
The level of concentration of economic power in digital markets is unprecedented:
What the new Digital Markets Act changes:
- It will allow businesses to have access to more information on how their products or services are performing on third party platforms
- No more unfair ranking of gatekeepers' own services and products compared to those offered by other businesses on the same platform
- Businesses will be able to more easily attract consumers who can no longer be locked in by gatekeeper platforms
- The new rules will make it easier for smaller businesses and new entrants to grow and expand, and compete with gatekeeper platforms.
- Increased competition can be expected to lead to greater innovation potential amongst smaller businesses as well as improved quality of service, with associated increases in consumer welfare.
The Digital Markets Act is expected to trigger a consumer surplus of around €13 billion euros. The increased opportunities for a diversity of market operators will lead to increased investment from their side. This can be expected to have an impact on economic growth ranging between €12 billion and €23 billion.
More jobs
The gatekeepers are necessary gateways to the European internal market. These are platforms that have a significant impact on the internal market, serve as an important gateway for business users to reach their customers, and which enjoy, or will foreseeably enjoy, an entrenched and durable position.