The Digital Services Act: SMEs need a more open and competitive internet ecosystem

  • The European Commission yesterday closed its consultation on the Digital Services Act package (DSA), which sets out to modernise the current legal framework for digital services

  • In a new position paper, DIGITAL SME emphasises the importance of targeted measures aimed at large platforms instead of a one-size-fits-all approach that could hurt SMEs

  • If done well, the DSA could strengthen competition by tackling gatekeepers while effectively allowing smaller players to enter currently closed-off markets

Brussels, 9 September 2020 (DIGITAL SME). The new Digital Services Act is an effort to harmonise the rules of how goods and services are bought and sold online in Europe—and much more. It will upgrade the 20-year-old e-commerce Directive, which regulated the distribution of content online while limiting the liability of internet service providers and intermediaries like large platforms. This limited liability enabled the success of many business models like YouTube or Facebook which live off third-party content that is not moderated in real-time.

New rules for new challenges?

At the same time, this limited liability of platforms also causes problems in the digital age. Rampant disinformation, election interference on social media, and the sale of faulty goods are just some examples. Moreover, in contrast to the early days of the internet which relied on openness and interoperability, many services offered by large platforms (such as messaging, social media, etc.) are accessible only in closed-off proprietary environments that lock-in their users and are thus shielded from competition. The Digital Services Act could upgrade safety standards and strengthen competition by tackling the problematic gatekeeping of large platforms—if the legislation is well-balanced. After the burdensome effects of the GDPR on small business, another digital act with a one-size-fits-all approach could jeopardise the business models of innovative SMEs and startups.

DIGITAL SME position paper calls for targeted measures to empower SMEs

In a new blog post and a detailed position paper, DIGITAL SME calls for measures that target the real concerns with large platforms, while at the same time allowing smaller businesses to thrive without additional burdens. At the same time, it recognises the opportunity of the DSA to contribute to a more open and competitive internet ecosystem.

European policymakers must find the right balance between tackling the market-distorting influence of tech giants while strengthening SMEs and startups in their pursuit of market access and fair competition rules.

Read the full position paper here.