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"SMEs foot the bill for EU digital regulation"


04 Jun 2021


Innovation & Enterprise
EU Telecommunications Council

The EU telecommunications ministers are discussing the digital future of the European Union. The EU's ambitious plans for platforms, artificial intelligence and data are good in principle. However, they must not be at the expense of small and medium-sized enterprises.

Brussels/Frankfurt, 4 June 2021 – A harmonised digital single market is essential for the future competitiveness of Europe and its industry. "It is therefore right that the EU is keeping its eye on the ball in terms of digitisation and is moving forward strategically," says VDMA Executive Director Thilo Brodtmann. "However, we are concerned about the large number of new laws and detailed regulations. There is a danger that small and medium-sized enterprises will have to pay the price in the form of more requirements and competitive disadvantages," he fears.

Digital bureaucracy disproportionately burdens small businesses

VDMA supports the goals of the initiatives discussed in the Council, such as those on artificial intelligence (AI), cyber security or the "Data Governance Act". However, many of the drafts are not designed in a way that is suitable for SMEs, but instead unnecessarily put a spoke in the wheel of companies. "When, for example, the new Network and Information Security Directive puts companies with 50 employees on the same level as large companies and when the AI Regulation creates new registration requirements for certain methods of programming, this goes too far. These kind of rules place a considerable financial burden on companies and restrict creativity that is urgently needed," says Brodtmann.

This particularly affects smaller companies that produce smaller quantities and small series which have to refinance, for example, the certification costs of an innovation with the fewer products sold compared to large companies. Thus, innovations that are subject to increased requirements are made more difficult.

"Another problem is that smaller companies in particular do not have large compliance departments that can take care of the bureaucratic and legal issues. This all leads to competitive disadvantages in an increasingly digitalised business world," says Brodtmann.

Maintain exemptions for smaller companies     

VDMA calls on legislators to take better account of the resilience of smaller companies and to make laws technology-neutral and practical. This also includes creating legislative exceptions or facilitations for small and medium-sized enterprises. "For example, in the Network and Information Security Act (NIS 2), the threshold for exemptions from the directive should not be lowered to 50 employees, but should be at the usual limit of 250 employees," says Brodtmann.



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