Many businesses and companies suffered during the pandemic and when the lockdown was imposed all over Europe. Multiple startups and SMEs underwent digital transformation and provided jobs in the rather finicky market. Now, to ensure that such startups and SMEs observe notable growth, the Digital Future for Europe coalition has called for a moratorium on new regulation.
The coalition consists of over 100 associations, think tanks, startups, scaleups, and successful tech businesses spanning across “Digital 9” nations. These nations are the Netherlands, Belgium, Luxembourg, Denmark, Sweden, Finland, Estonia, Ireland, and the UK. The coalition asks the European Commission (EC) to place a moratorium on new regulation until the European Innovation Council’s (EIC) Innovation Forum has fully reviewed the potential impact of regulatory changes on the tech sector.
Upcoming regulations could stifle innovation and growth
As per the Digital Future for Europe, the new regulations being placed for the tech sector could stifle innovation and growth. The new regulations are dubbed the Digital Markets Act and are aimed at tackling unfair practices and curb many tech giants’ power. Such companies will be blocked from stunting competition in digital markets.
Those tech companies that misuse customer data and make it difficult to switch platforms will also be cracked down upon, under the new law. Additionally, the new law will need online platforms to verify sellers’ identity before they let them use their services and provide easy customer complain methods.
Tech firms will also be required to publish reports on the action undertaken to remove illegal content. They also need to be transparent with users about who pays the firms for ads on their platform, and why these ads are shown to a particular user.
The coalition has also posted a comprehensive report, which offers numerous recommendations. These recommendations are for the Commission and individual governments, which can enable the European tech sector to play a key role in economic recovery post-Covid-19. This also includes a call for the Commission to create an expanded fund for innovative Covid resilience projects.
The Coalition is also calling up on the Commission to commit an expansion of their EIC fund’s size, which currently sits at €314M. Additionally, a request to expand the scope of EIC’s funds are also placed, to boost pandemic resilience.
Joel Gladwin, Head of Policy at The Coalition for a Digital Economy (Coadec, UK) says, “The most resilient sector coming out of this crisis is tech. But the crucial thing is how tech has enabled so many other sectors to become more resilient. It’s obvious that the more a Government does to protect startups and scaleups, the more they will enable a tech-powered recovery for the entire economy.”
Boosting post-pandemic resilience of startups and SMEs
Startups provide about two million jobs and are one of the biggest sources of employment in many European countries. Startups also rely on foreign investments to scale up and the new regulations could restrict this growth factor.
Christian Walther Øyrabø, CEO of Autovice A/S (Denmark) says, “We have to ask ourselves, do we want the next big companies to come from Europe? If we do – rather than the US or China – we need to protect foreign investment. For a lot of startups, outside investment is a big part of the future. I don’t know why politicians would want to risk that, it would be a huge risk to shrink the opportunities for growth.”
There are multiple other recommendations made by Digital Future for Europe in its report. Some of them urge governments and nations to explore the benefit of Digital Adoption Funds and to collaborate on digital ID to create a blueprint for the rest of Europe. Additionally, mutual recognition of Startup Visas across the ‘Digital Frontrunner’ countries can help attract global talent.
Kadri Tammai, Head of Startup Incubator at Tallinn Science Park Tehnopol (Estonia), says, “Startups have so much to teach to companies: how to be agile, how to change your work conditions quickly if needed; how to enter foreign markets; how to be flexible regarding working hours and where you work from for this period of time. Start-ups can be like role models. That’s why the EU should prioritise funding for start-ups to enable recovery and resilience”.
Image credits: Digital Future for Europe