Germany weighs in on EU’s bid to regulate digital giants

Germany has given an insight into its forthcoming approach for regulating the platform economy as part of the EU's Digital Services Act and Digital Markets Act, two landmark packages set to be unveiled by the European Commission on December 2.

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Germany has given an insight into its forthcoming approach for regulating the platform economy as part of the EU’s Digital Services Act and Digital Markets Act, two landmark packages set to be unveiled by the European Commission on 2 December.

Speaking as part of an expert panel hosted by ACT – The App Association on Wednesday (28 October), Armin Jungbluth, head of the digital services division in the German Economy Ministry, laid out his country’s position on the plans.

As part of the Commission’s Digital Markets Act, the Commission plans to unveil a list of ex-ante prohibited practices by digital gatekeepers, as well as a market investigation tool that could be used to examine how certain markets are prone to failure.

“With regards to these large gatekeepers, we are in favour of a combination of the introduction of clear obligations and prohibitions or restrictions of certain unfair trading practices – the so-called blacklist – and the adoption of tailor-made remedies on a case by case basis,” Jungbluth said, adding it is important to have a set of “clearly defined quantitative or qualitative criteria” to assess which platforms will be subject to these obligations and prohibitions.

Jungbluth also revealed that he is regularly contacted by many platforms, concerned that their services may come under the scope of the new rules, and as a result, “the most difficult first step” for the EU executive will be defining what a ‘gatekeeper platform’ actually is.

Germany also supports the notion of establishing a pan European regulator to oversee enforcement of the bloc’s new competition capacities.

Asked whether Germany would pursue a similar line to France as to advocating for the potential breakup of tech giants, Jungbluth poured cold water on the idea.

“Personally, I’m very reluctant to start with the ‘sharpest sword’ in terms of the breakup or structural separation of companies,” he said, adding that it had been a potential avenue of action pursued in the past by former German Economy Minister Sigmar Gabriel, who ultimately failed in convincing German Parliamentarians of this course.

“However, fines alone do not solve the problem,” Jungbluth added.

In terms of the Digital Services Act, which will introduce new rules covering a range of areas of the platform economy from content moderation to online advertising and the transparency of algorithms, the Germans believe in preserving the core elements of the EU’s current set of rules featured in the 2000 eCommerce Directive.

This includes the ban on a general monitoring obligation for service providers as well as platform liability exemptions. However, Jungbluth also believes that such measures may have to be “complemented” by “incentives to take responsibility” for the platforms.

Berlin also believes that the ‘country of origin principle’ of the 2000 e-Commerce Directive, which states that service providers only have to comply with the laws of the member state that they are legally established in when operating across the bloc, should be “rethought.” For its part, France also believes that this clause needs revision.

Protecting Europe’s SMEs

More broadly, Jungbluth believes that the new rules shouldn’t be to the detriment of the small and business-sized business in Europe, and particularly in the app developing community, many of which rely on the larger platforms to deliver their services.

“Small and medium-sized enterprises, especially in Europe, like app developers, should not be subject to excessive obligations and unnecessary administrative burden,” he said.

However, there are those working across Europe’s small and medium-sized business community that still believe certain ‘unintended consequences’ could arise from the recently leaked draft of blacklisted practices that have recently surfaced.

Prohibitions on certain ‘self-preferencing’ activities, including a ban on preferential ranking in online search engines or online intermediation services, is one particular area that some app developers have highlighted their concerns on.

“Anything that you impose on one platform will have an effect on what small businesses can do,” said Mike Sax, founder of ACT – The App Association. “This can have unintended consequences that are by definition almost impossible to predict.”

“If you restrict, for example, gatekeeping, you also risk reducing the level of trust that people have in the app stores because you restrict the ability for the platforms to keep out bad practices.”

Meanwhile, speaking at Wednesday’s event, Stanislas Dewavrin, Co-Founder of the ‘Oh Bibi’ game app, urged EU policymakers to consider the sustainability of the whole ‘platform ecosystem’ as opposed to focussing too much on the operation of the tech giants.

“The app economy is not just about platforms, but it’s about the whole ecosystem, including the consumers and the people actually designing the apps,” he said.

“It’s a dynamic area. No two platforms are built on the same principles, so everything has to be thought out very carefully.”

[Edited by Zoran Radosavljevic]

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