While writing the previous article on the ‘Gig’ economy, I started to think about the wider EU digital, or as I amicably refer to it, the ‘Geek’, economy, what its participants actually need from policymakers, and what are the latter actually doing to meet the needs of the former?

For decades, the EU’s tech and digital entrepreneurs have been raising concerns over the fragmentation of EU’s tech market, which makes it extremely difficult for start-ups to scale in the current regulatory spaghetti bowl of divergent Member State laws. EU tech companies have been constantly highlighting this issue as the most serious obstacle to their success.

So, what has the EU done over the course of its current term (2019-2023) to meet the needs of its geek entrepreneurs and unlock their potential?

In brief, I think it has gone the long way round. The EU seemed mostly preoccupied with tackling the dominance of big international (usually US) tech companies, rather than tackling the core of the demands of EU’s companies. Over the past 3 years, the EU put out a dozen legislative proposals aimed at the tech sector which I will give a brief (and in no-way unbiased) summary below:

• DSA – while it will give more protections for consumers online, it puts more compliance burdens on SMEs.
• DMA – will give more protection to European platforms that are usually smaller than their US competitors, so hypothetically will support SMEs from unfair competition.
• AI Act – new obligations on all AI developers and programmers, but too early to say if it will target more the US giants or all companies (including SMEs).
• Data Act – will open much more data for use by companies, but will it provide enough incentives for companies to make such data available?
• Gig economy – looking to shift rapidly growing sectors of employment back into a more traditional labour and employment frameworks.
• Crypto Assets (MiCA) – looking to reign in (until recently) the burgeoning crypto market under the traditional financial regulation framework, similar to what is being attempted for the gig-economy.

Conclusion is, the EU must harmonise existing rules before starting to regulate new issues, to avoid layers of rules being created. That is, it should tackle the core problem of regulatory fragmentation in its digital economy, and not focus overly on adding more regulation on SMEs. Otherwise, EU’s tech entrepreneurs, engineers, developers will continue to move to the US (or maybe even Russia).

Author: Milan Pajic, Director, Tech and Digital Policies (milan.pajic@grayling.com)