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Key Arguments from Allied for Startups’ Response to the DSA Impact Assessments

July 7, 2020

As stakeholders share feedback on what needs to be changed in the innovation ecosystem, we use the Inception Impact Assessment Consultation on the Digital Services Act to take a step back and also look at what works for startups.

Fundamentally, the online platform economy has not just been a source of innovation, growth and jobs in the last decades, it has also produced positive effects on the rest of the economy, including digitisation, increased connectivity and consumer empowerment. For example, this collection alone lists >300 free platforms any entrepreneur can use to build/expand their business.

Startup founders build a business with the goal to be number 1! There is no limit on the ambition of new European startups. This ambition should be supported by legislation that enables startups to challenge the big incumbents, and not legislation which sets a limit on the ambition of a startup in Europe. An approach that attempts to turn back time or is holding back startups from becoming scale-ups risks undercutting the very potential EU policy makers are trying to unleash. Here are key arguments from our response to the Commission’s Impact Assessments on the Digital Services Act:

  • The E-Commerce Directive continues to serve a purpose and there has not been industry-wide evidence to suggest a wholesale revision of the ECD is necessary. The ECD is now also over 20 years old. The digital economy has grown exponentially since 2000, which brings new opportunities and challenges that an update and clarification of the ECD regulatory framework can address. The ideal way forward is a proportional based-approach that gives every platform startup a clear pathway to attaining a limited liability exemption.
  • We expressly welcome measures taken to reaffirm the role of the Single Market and harmonise rules where possible. Becoming a scale-up continent means not having to start-up 27 times in the EU, and a strong Country of Origin principle helps guarantee that.
  • As it has grown, the online platform economy has become an integral part of the economy at large. The two have become increasingly interdependent and both are reliant on an innovative ecosystem. It has enabled entrepreneurs to build a startup based on a plethora of available tools and resources. A social impact startup fighting food waste can build its service on an existing map. A local SME can employ existing payment solutions.
  • Startups integrate and acquire more services to build the best possible user experience. Moreover, it is worth considering the knock-on effect that a regulatory instrument would have on startup ecosystems. Does ex-ante scrutiny mean that in response to growth and success unicorns will be met with increased obligations? What message does the EU send to EUnicorns and ‘would-be EUnicorns’ if they are suspected of gate-keeping and this alone allows policy makers to clip their wings? To avoid sending the wrong signal that becoming big means getting challenged by the regulator, the SME test of the DSA should be complemented with a Scale-up test.

Please find our public consultations on the DSA package and on ex ante rules here.

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