By H.E. Prof Kristina Sinemus, Hessian Minister of Digital Strategy and Development.
“To big to care” – this is how Thierry Breton, European Commissioner for Internal Market, described the problem: Digital platforms with considerable market power exercise control over whole platform ecosystems.
They act as “gatekeepers” by limiting access to digital markets for smaller businesses and start-ups. The dependency of many businesses on these gatekeepers often leads to unfair practices. This is why the European Commission presented the Digital Markets Act in December 2020, which is currently being debated in the European Parliament and the Council.
The aim of the new regulation is to enable all market players to operate in a fair digital ecosystem.
Indeed, the time is ripe for a new European framework that ensures fair competition on the Internal Market irrespective of the market power of the platform on the one hand but leaves sufficient room for innovation on the other hand.
Platforms significantly change the way our economies and industries have traditionally been organised. They are the bedrock of future value creation systems. They are already part of our daily lives – be it as a social networking platform, marketplace or content platform. The European Commission estimates there are over 10 000 online platforms operating in Europe’s digital economy.
A recent study by the German Bundesnetzagentur – the authority ensuring compliance with the Telecommunications Act, Postal Act and Energy Act in Germany – confirms their importance for our economy and SMEs in particular. Between March and August 2020, during the Bundesnetzagentur’s public consultation a total of 210 business customers reported on their experience with marketing and sales activities via digital platforms in Germany. Nearly three quarters of business customers felt they would have considerable difficulties competing successfully in the German market without the use of digital platforms. Overall, half of business customers assume they would not even be able to exist on the market without digital platforms.
Against this background, it is worrying that only 12 out of the 100 biggest platforms in the world are European. Europe is dramatically lagging behind!
It is urgent and important for Europe’s digital sovereignty that it strengthen its platform economy. New innovative platforms and digital services must increasingly be created in Germany and Europe. We have a strong industrial base in Hesse and Germany, and many innovative companies in the information and communications technology sector, for which platforms are becoming increasingly important.
This is why the European Commission’s proposal for a Digital Markets Act is so important. The proposed regulation is designed to ensure contestable and fair markets in the digital sector by providing regulatory safeguards throughout the European Union against unfair behaviour by very large gatekeeper platforms towards other providers and clients with less market power. I fully support this vision: by creating the right regulatory framework, we allow smaller platforms and start-ups to enter the market and to grow, strengthening our European platform economy in the process.
At the same time, we ensure fair market conditions for all companies on the Internal Market, in particular SMEs that need platform services for their business. However, we must strike the right balance. Yes, we need to tame the gatekeepers.
Big platforms must not be “too big to care”. They have to respect European rules. However, we must not over regulate either. We need to avoid burdensome requirements that could hamper innovation. The behavioural obligations set by the Digital Markets Act should be complemented by a general clause that gives a certain flexibility regarding new business models and behaviour in order to make the new regulation future-proof.
For further information Hessian Ministry for Digital Strategy and Development: https://digitales.hessen.de//
Photography by HMinD Hessian Ministry of Digital Strategy.