Innovative online platform scaling-up in the EU

  • There are more than 10,000 platforms in the EU
  • 90% of those are
    small and medium sized enterprises

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 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.

Thriving legitimate businesses

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.

By tackling illegal activities and product online, legitimate business can be thriving online.

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.

Empowered SMEs and start-ups

  • 40% of companies that sell products online do it through online marketplaces,
    according to Eurostat (2019)

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.

laptop smartphone and bic

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. (Open public consultation on a New Competition Tool)

What the new Digital Markets Act changes:

  • Open up new opportunities for businesses, who will be able to innovate and compete against gatekeepers’ own services in equal terms.
  • Consumers will be able to see which are the best options available and not just those that the gatekeepers want them to see.

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:

  • 7 out of the world’s ten largest companies
    are digital market players

Large online platforms intermediating between businesses and consumers are growing at an exponential pace. They have several hundreds of millions of users (both businesses and citizens/consumers). New market operators that may want to enter or expand in digital markets where a gatekeeper is present may find it extremely difficult to overcome some of the inherent barriers to entry or expansion without access to a sufficiently large user base.

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.

What the new Digital Markets Act changes:

  • Start-up and new businesses will emerge and grow, and will create new jobs, thanks to a level playing field.