Europe’s DMA: The Cloudy View From Athens

Greece, long a digital laggard, is accelerating its digital transformation. It must avoid Franco-German inspired overregulation.

Although Greece still ranks second to last in overall digitalization among the 28 European Union member states, according to the EU’s Digital Economy and Society Index (DESI), it is improving. Half the population have acquired basic digital skills. Fast broadband coverage is expanding. More than 90% of Greek companies have adopted a digital roadmap.

Regulation should avoid jeopardizing this success. Small EU countries such as Greece need US tech investment and do not share the same interests or possibilities of large member states to develop alternative national digital champions.

Under French and German leadership, the EU has enacted a series of new digital rules, chief among them the Digital Markets Act. The targets are the largest US tech companies, from Apple to Microsoft. The US Chamber of Commerce has criticized the DMA for penalizing US companies that have made investments and maintain significant operations in the EU. Chinese digital giants could perhaps benefit.

While the EU’s determination to strengthen the legal framework for governing large US tech firms is fair, it remains an open question whether the new rules will help or hurt European competitiveness and innovation. The lack of European platforms of the US digital caliber is telling. If the US digital colossi leave the Old Continent, will the EU be able to find equal replacements?

The concept of “technological” or “digital sovereignty” reflects the EU’s goal of achieving strategic autonomy in digital. Brussels is concerned about the economic and social influence of non-EU technology companies, which arguably threaten EU citizens’ control over their personal data and constrain the growth of EU high-tech companies. In her 2020 State of the Union speech, Commission President Ursula von der Leyen said that EU needed a common plan for digital Europe with clearly defined goals for 2030, such as for connectivity, skills and digital public services.

From the Brussels prism, strict European regulations are expected to push US “gatekeepers” into adjusting to a fair and balanced ecosystem. But it is doubtful that the EU will achieve this goal. One study suggests that the DMA is to hurt consumers by eliminating choices in the market and potentially raising the cost of certain products. It is important to strike a balance between SMEs’ dependence on internet giants and the vast business opportunities these same SMEs might lose if access to them is jeopardized.

It would be helpful for the EU to elucidate how the DMA will pave the way for new investments in research and development in information and communication technology large US tech firms have some grounds for complaining about being stigmatized. Online platforms innovate to attract and retain users, investing enormous sums in research and development.

The public debate over the DMA has been limited in Greece. Greek newspapers have devoted little coverage. The new rules do not directly impact Greek companies, which on average are smaller than their average EU counterparts. No Greek company risks being identified as a gatekeeper.

But Greek startups should be concerned. A study by Enterprise Greece shows that startups are concentrated in sectors with relatively low profitability. Their main operation model is business-to-business. The majority of profitable startups (71.5%) earned less than €50,000 in 2018. This was the lowest figure among European countries.

A January 2020 National Bank of Greece report analyzed Greek manufacturing and considered it essential SMEs innovation be supported, if Greece is to narrow the gap with other European countries. A 2020 EY survey shows that the majority of investors who were asked — 38% in comparison to 25% in 2019 — said that investments in innovation and high technology were important for Greece.

It is in Greece’s interest to monitor the DMA debate and make sure that differences between the EU and the US are bridged. Greek SMEs and startups need strong transatlantic commerce and harmonious data flows. Although Greece can hardly play the role of mediator or facilitator, Geece needs US investment in innovation.

George N. Tzogopoulos is a Senior Fellow at the Hellenic Foundation For European and Foreign Policy in Athens.

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.