Europe had warned us when the new Commission was set up, back in 2019, that it wanted to make Europe “fit for the Digital Age”, to quote Ms Vestager’s title position. Indeed, the European Union has been extremely active on that front in the last five years, with landmark initiatives such as the AI Act, the Digital Markets Act, the Digital Services Act, the Data Act and the SREN bill (a French initiative transposing some of the aforementioned European regulations). Designed to frame the use of new technologies, these regulations have significant implications for the startup ecosystem. In line with European values, they aim to ensure transparency, accountability, and security while fostering innovation and competitiveness. However, despite their commendable intentions, they pose major challenges for startups, in particular with regard to the resources required to comply with them, which leads to a loss of competitiveness against foreign actors. 

One of these landmark initiatives, as mentioned, is the Digital Markets Act, a proposal by the European Union to regulate large digital platforms, nicknamed *gatekeepers*, to ensure that other digital actors can have fair access to their services, open competition, and an overall fairer environment for smaller businesses and consumers. One example of its positive impact could be the Apple case and the associated fines for its practice in the online music sector.

The Apple case highlighted the company’s alleged anti-competition practices in the online music domain, particularly through the App Store. Apple was accused of favouring its own music services at the expense of its competitors by imposing restrictions and high fees on third-party developers who use its App Store to distribute their music applications.

The enforcement of the DMA could have a positive impact in this context in several ways:

• Promoting Fair Competition: The DMA aims to prevent large digital platforms from abusing their dominant position to stifle competition. By imposing strict rules on business practices, such as self-preferencing and unfair contract terms, the DMA could help create an environment where smaller businesses and new entrants can compete on an equal footing.

• Transparency and Fair Access: The DMA also requires greater transparency from large digital platforms, which could help expose unfair business practices like those alleged in the Apple case. The DMA’s rules could require platforms like Apple to provide clear information on the terms and fees associated with distributing apps via their app stores, ensuring fair access for all developers.

• Deterrent Fines: The DMA provides significant fines in case of non-compliance with the rules, potentially up to 10% of the company’s annual global revenue. These deterrent fines could encourage large platforms to review their practices and align with the DMA requirements to avoid substantial financial penalties.

In summary, the enforcement of the Digital Markets Act could help promote a fairer and more competitive digital environment, where large platforms are required to adhere to transparent and equitable rules, thus benefiting smaller businesses and consumers. The Apple case and the associated fines underscore the importance of regulations like the DMA to preserve innovation and competition in digital markets.

Another key initiative launched by the European Commission was the AI Act, adopted in February 2024 but which started even before public attention turned to tools such as ChatGPT. This regulation aims to establish common standards for the development, deployment, and use of AI while ensuring the protection of the fundamental rights of European citizens. Among its key provisions are requirements for companies to disclose how they use AI, as well as security and transparency mandates. While these measures aim to build trust in AI-based technologies, they also impose additional obligations on startups, which may have implications for their ability to innovate and grow rapidly.

Compliance with the AI Act thus poses a major challenge for many European startups. These companies, often facing constraints on resources and capabilities, must invest considerable time and effort to understand and meet the regulation’s requirements. Key steps include mapping AI systems, conducting impact assessments, obtaining certifications and CE markings, and establishing governance and oversight mechanisms. These processes often require significant investments in terms of personnel, technology, and training, which can pose an additional barrier to the growth of startups, especially those operating in highly technology-intensive sectors.

In addition to the AI Act, the bill aiming to secure and regulate the digital space (SREN) in France aims to transpose European regulations into national legislative frameworks. This bill, part of an effort to harmonize and modernize French law, aims to ensure the consistency and compatibility of national rules with European standards. However, its impact on French startups is yet to be determined, particularly regarding the complexity of compliance procedures and their interaction with other national and European regulations. For startups, it is essential to closely monitor the progress of this bill and ensure they have the necessary resources and support to comply.

Faced with these challenges, European startups need increased support from public authorities and ecosystem actors. As such, France Digitale, the startup and investment fund association I lead, plays a significant role in promoting the innovative ecosystem’s interests and raising awareness of digital regulation issues. By advocating measures such as targeted funding, simplifying administrative procedures and strengthening support measures, France Digitale is helping to create an environment that is more conducive to innovation and growth for startups in Europe.

To overcome regulatory compliance obstacles, it is crucial to explore practical and strategic solutions. Public authorities could consider targeted grant programs to help startups finance compliance costs, while professional associations and incubators could offer specialized training and resources to facilitate the process. Furthermore, encouraging startups to integrate responsible practices from the design stage of their products and services can help build public trust and ensure their long-term success.

In addition, promoting collaboration among startups, large companies, universities, and public authorities is essential to drive innovation and consolidate the position of European startups on the global stage. By fostering knowledge exchange and strategic partnerships, we can strengthen the European innovation ecosystem and create true innovation champions.

We have all the means to make Europe the leader in innovation. Europe understands the stakes of innovation, and it is indeed the first to regulate them. Today, we must take a more assertive approach and enable market players to stay competitive because Europe must not only participate in the race for innovation, it must win it.