Redefining the future: EU Parliament elections & SMEs
As the European Union (EU) approaches the first European Parliament (EP) elections post-Brexit, the focus is on how they will influence tech regulation and effect small and medium enterprises (SMEs). European elections not only determine the Members of the European Parliament but also influence the composition and priorities of the new European Commission, with significant implications for Europe’s digital and regulation landscape.
Many within the app economy, including industry leaders and SMEs, advocate for the EU to improve the implementation and enforcement of existing regulations rather than introduce new ones. This approach could mitigate the regulatory burden on SMEs, which often face significant compliance costs and complexities.
The potential burden of regulation on SMEs
SMEs often find themselves more acutely impacted by regulations due to their limited resources for managing compliance. First, by focusing on improving the effects of existing regulations through clearer implementation and more consistent enforcement, the EU can create a better environment for SME innovation, where small firms enjoy more clarity and predictability in their operations instead of constantly keeping up with new, costly regulatory changes. Second, where new regulation is needed, it should be based on well-demonstrated and systemic harms (not hypotheticals or edge use cases) and the impact on the SMEs that are driving European innovation.
EU policies have far-reaching implications across the global stage, affecting businesses worldwide, including in the UK and the United States. As digital markets are created and evolve, the influence of EU regulations extend globally, requiring SMEs everywhere to comply if they wish to access the EU market.
Recent shifts in EU regulatory discussions
Fortunately, there is already an increasing acknowledgment within EU institutions of the disproportionate impact regulatory pressures can have on SMEs. Recent discussions within European Parliamentary parties and comments from Commission representatives have shown a shift towards prioritising SME needs, recognising the need for greater support in navigating the regulatory landscape.
Highlighting reform: SEP regulation and SME empowerment
When they are shaped in response to demonstrated harms and risks, regulations can help relieve burdens for SMEs by addressing harmful practices that hinder innovation. The recent move by the Legal Affairs Committee of the European Parliament to advance the EU’s proposed SEP regulation, which is aimed at curbing practices that hinder competition, exemplifies this focus. This regulation is crucial for SMEs which develop on standardised technologies for a wide range of consumer and enterprise internet of things (IoT) use cases. The notable progress made by the EU to advance its proposed SEP regulation in 2023 and 2024 underscores the EU's commitment to creating a fairer environment for SMEs, emphasising regulations that promote rather than inhibit innovation.
Potential impact of the upcoming elections
The upcoming European Parliament elections will profoundly influence global tech regulation. If the new Parliament and Commission continue to prioritise SMEs and reducing the barriers and abuses they experience, the EU could significantly boost both its own and the globe’s competitiveness and economic resilience. This strategy would not only strengthen the EU's internal market but also create a more predictable and inviting environment, particularly for non-EU-based SMEs operating on a global scale.
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