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Small Businesses warn MEPs that DMA will harm their business

Brussels – November 22, 2021, Hundreds of company owners across Europe signed a letter to the European Parliament, calling on MEPs to defend SMEs during today’s vote of the European Commission’s proposal for the Regulation of Digital Markets (DMA – Digital Markets Act).

While understanding the “good intentions” of the European Commission, in the letter, the companies from a variety of sectors – from tourism to commerce – expressed their concerns about how the DMA will “change the digital world” and warned about the damage that this change will consequently bring to small businesses.

“We adapted to the new reality, investing time and money in effective and affordable digital services. Controlling the power of the big digital platforms is an admirable goal. Still, there is a significant risk that DMA is not balanced and that its practical effects will increase digital complexity and costs for small businesses,” stated the letter.

Some provisions of the DMA that small businesses are concerned about include:

  • That DMA could force digital platforms to eliminate free services, such as Google My Business and Google Trends, that disproportionately benefit small businesses which cannot afford paid business listings or expensive market data.
  • That DMA would raise the costs of targeted advertising by restricting data sharing within companies like Google and Facebook, even when consumers exercise GDPR rights and approve these uses of their data.
  • That DMA would make search advertising more expensive by limiting the amount of advertising on search results pages, because DMA would require digital platforms to treat many competitor products and their own products alike.
  • That DMA would even go so far as to ban targeted advertising. It is important to remember, that small businesses use affordable targeted advertising to find new customers and compete with much larger companies with significantly larger advertising budgets.

Basic economics rules apply to advertising and data analytics: when competition for space is limited, prices will increase, and when the amount of data is constrained, the algorithms don’t work as well, and small businesses will pay more to reach the same audience. These proposals diminish the value of digital marketing and advertising that helped sustain and grow so many businesses and jobs during the pandemic.

“These businesses are not competing with Google or Facebook (Meta), Big Tech allows them to compete with other businesses within their category” said Brandon Mitchener, a European spokesman for 3C. “If some of the proposed amendments are accepted, like a ban on targeted advertising, are the European politicians really suggesting that millions of SMEs should start advertising the old-fashioned way? They simply can’t afford ads on billboards or tv like other big companies do. DMA might unintentionally make European SMEs less competitive and stifle their growth”.

“For example, it makes perfect sense for small businesses to use a multi-tasking platform, as it saves time and money, and we just have to learn one system. In addition, there is a proposal to ban targeted digital advertising. Small businesses favour very large advertising platforms because they are affordable, reach the majority of consumers, and use sophisticated targeting to help businesses grow and prosper. Banning this service will put small businesses at a great disadvantage”.

Among the signatories are businesses that thanks to the digital tools have survived the Covid-19 pandemic. They are often relaying on access to cheap and interlinked digital services that allow them to efficiently reach their customers and compete with other businesses.

Subscribers to the letter supported a Connected Commerce Council (3C) campaign. The Connected Commerce Council (3C), a global small business organisation with more than 2000 digitally empowered European members.

The Connected Commerce Council fully supports the European Commission’s goals to ensure fair competition in the digital marketplace. Competition fuels innovation and opportunity. But there is a high risk that the unintended consequences of DMA would put small businesses on a path of “digital regression” rather than digital transformation by burdening business owners and their small teams with more digital complexity and uncertainty, reduced efficiency, and higher costs.

This autumn the Connected Commerce Council has been raising awareness about the potential hit that the European businesses might take due to the battles of the European Institutions with the Big Tech.

3C is calling on MEPs to ensure that Small Businesses do not become the collateral damage of the DMA provisions.

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