In and around the European institutions, the temperature of the discussion concerning the Commission’s plan to more strictly regulate large tech and e-commerce platforms such as Google, Facebook, and Amazon is slowly rising. Small and large webshops, which have seen enormous growth since Covid, are following the situation closely. So what exactly is it all about?
Gatekeepers
The proposal currently working its way through the European institutions is called the Digital Markets Act (DMA). This initiative of the European Commission wants to create a regulatory framework for the so-called “gatekeepers”. These are platforms that combine so many different services that they have become ‘systemically important’ in the eyes of Europe.
This is a euphemism for platforms that, because of their scale, scope and integration of different services, have become almost unavoidable for small and large e-commerce players looking for customers among the billions of users of those platforms. “Digital gatekeepers must observe several well-defined obligations and prohibitions to prevent unfair practices”, wrote Competition Commissioner Margrethe Vestager in an opinion piece at the end of 2020, when the DMA proposal was launched.
Market dominance versus ease of use
Since then, all parties involved have been taking their stands. Opponents of the major platforms argue that they are abusing their market dominance by using the sellers’ data on their platforms to their advantage and are making competition impossible. The platforms themselves point to the enormous ease of use of their integrated service offering and argue that the new rules will only lead to increased complexity and costs.
The traders who use these integrated platforms risk becoming the object of the lobbying game that is being played over their heads. Yet, there is a lot at stake for them. Many small businesses are sensitive to the argument that a one-stop-shop of, say, Facebook or Instagram saves them a lot of time and effort in promoting and selling their products quickly across different platforms.
Platforms act as turbo on e-commerce growth
But BeCommerce, the Belgian e-commerce federation, agrees with the European Commission’s intentions. The federation points out that Covid has given e-commerce in Belgium a massive boost, making this a hugely important discussion. “We are still mapping out the exact impact of Covid on the evolution of e-commerce in Belgium”, says Sofie Geeroms, CEO of BeCommerce. “But apart from any exact figures, everyone agrees that we have seen an exponential growth in the number of webshops in Belgium.”
And that trend is also continuing on the major platforms, which are turbocharging that growth. There too, it is hard to find exact figures. But Geeroms does have some indicative figures. “At the end of 2019, Amazon counted 1,600 Belgian sellers on its platform”, she states. “It’s hard to measure where we are currently because, in the meantime, in addition to the German and French sites, a Dutch one has been added. But if you know that bol.com had 3,000 Belgian sellers on its marketplace by the end of 2020, you can already see that there has been enormous growth there as well.”
Should those platforms be broken up or at least be subject to strict rules? “We are positive about the intentions of the DMA”, says Geeroms. “The rules want to create more competition and achieve lower prices. There have already been examples of unfair trading practices on the major platforms.”
Don’t throw the baby out with the bathwater
But Geeroms is not overly happy with the current shape of the rules. “The problem is that they originate from an attack on the existing platforms”, she explains. “It lacks a vision of what the whole ecosystem should look like in the long term, with a clear framework in which new players also get a chance to compete fairly with the existing players. This would be to the advantage of the merchants, who could then shop around for different service providers.”
Geeroms is wary of throwing out the baby (the ease of use of technological platforms) with the bathwater (the overly dominant position of current platforms). “We are living in a platform economy”, she says. “And transparent, competitive platforms are good for the development of e-commerce. They create growth, sales and jobs among merchants.”
