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DSA: How Proposed Marketplace Obligations Could Hurt Europe’s Small Businesses

Christian Schläfer, the founder of the German retailer Fansport 24, sells athletic clothing, specializing in team jerseys. Most of his turnover comes from online sales. As he explains, marketplaces allow him to reach new markets; he now exports to Austria, Spain, Italy, and beyond. Marketplaces support his growth. They translate his sales pitches. 

But Schläfer is now worried that European policymakers will wound his businesses. The proposed Digital Services Act (DSA) aims to protect consumers from buying, viewing, or engaging with illegal products and content. That’s understandable. But some European policymakers are even threatening to make marketplaces liable for every product sold through their channels. If that were the case, marketplaces would have to adopt a very cautious approach, especially in light of the high fines set out in the DSA – up to six percent of the platform’s revenue. 

For Schläfer, these proposals are dangerous. He fears marketplaces blocking many of his products from going online, out of unwarranted claims that they might be fakes. Marketplaces will be required to demand more and more information about each product, time-consuming for smaller sellers like him to provide. Marketplaces could even shut down entire categories of products considered too risky. Online marketplaces, acting as intermediaries, shouldn’t become liable for their sellers’ products. Contrary to the EU’s goals, a restrictive DSA would also make Europe less fit for the digital age by slowing down Europe’s digital transformation. 

It doesn’t have to be this way. The original European Commission proposal was reasonable, holding digital service providers accountable without strangling them and their small seller customers. Since its presentation, however, some lawmakers have seized on the opportunity to regulate a variety of other topics, some even in great detail. While more prudent voices would argue that the DSA can’t be everything to everybody, some lawmakers have even gone as far as adding an entirely new section targeted at marketplaces. While the public debate has centered around a few well-known companies, the truth is that lawmakers will be imposing new obligations on tens of thousands of companies in Europe, most of which are small businesses. The European Parliament amendment overload has unfortunately also slowed down the EU legislative process. 

The DSA remains an opportunity to set realistic obligations for e-commerce services that balances both consumers’ and small businesses’ interests. The DSA should acknowledge the importance of all the very different actors in the ecosystem and assign liability accordingly. If lawmakers allow, it might even help make Europe fit for the digital age – and allow dynamic entrepreneurs such as Christian Schläfer not only to survive but to thrive in Europe.

European Union

DisCo is dedicated to examining technology and policy at a global scale.  Developments in the European Union play a considerable role in shaping both European and global technology markets.  EU regulations related to copyright, competition, privacy, innovation, and trade all affect the international development of technology and tech markets.