Europe Must Rethink the Digital Services Act

Mikołaj Barczentewicz | 29th June 2021 | Uncategorised
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The European Commission claims that the Digital Services Act (DSA) will deliver much-needed harmonisation and clarity of regulation. In fact, it introduces new risks and costs on businesses without adequate justification. If the European Commission aims to improve the competitiveness of Europe’s digital economy and to safeguard the interests of European consumers, its proposals must be significantly amended.

A Blow for Small Business A good illustration of how the DSA lacks a basis in sound evidence is the new compulsory “out-of-court dispute settlement” mechanism for users of online platforms. The fees for such dispute settlement would be covered by online platforms if they lose, and the platforms will not be able to recover their own costs - even if they win. In its DSA Impact Assessment, the European Commission did not even attempt to calculate the burdens that this might impose, especially on medium-sized enterprises. Even “good faith” disputes could escalate to the point of becoming an unsustainable burden for anyone other than the largest players. Although the DSA excludes small and microenterprises from this particular mechanism, it still requires any company with a turnover above €50 million or balance sheet above €43 million would be caught out. Many online platforms, especially startups, operate with very small or negative profit margins. Hence, a startup with a turnover of €50 m...

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