Europe’s small businesses face yet more new EU regulation

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BrusselsReport.eu
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By Tomáš Zdechovský, Czech MEP (EPP) and Ivan Štefanec, former Slovak MEP (EPP) and SME Europe Honorary President 

Throughout our political careers, both of us have learned how difficult it is to strike the right balance between protecting consumers and enabling entrepreneurship. We believe that Europe has rightly established strong standards through the GDPR and the Digital Services Act (DSA), and these must be firmly enforced. But it is equally important to recognise that small firms depend on lawful, consent-based tools to stay competitive in crowded markets.

Even with high-level reviews like the Draghi report on EU competitiveness – which warned of Europe’s declining productivity and excessive regulatory burdens – and repeated concerns from the United States about overregulation, the EU still hasn’t got it right. The balance between consumer protection and growth remains elusive. The forthcoming Digital Fairness Act (DFA) will be the next test of whether Brussels can safeguard citizens without creating new barriers for the firms that drive jobs and serve communities.

A new EPPP survey of 2,092 small and medium-sized enterprises (SMEs) across six Central and Eastern European (CEE) countries confirms what business owners already know: two-thirds of firms that advertise online rely on targeting tools such as location, age or interests to reach the right audiences. These tools form the backbone of how small firms connect with customers today. Almost half of CEE SMEs report that audience-targeted ads generate at least a quarter of their total revenue – clear evidence that this is a core driver of business performance.

The reason is simple: the tools work. The most common benefits cited include finding new customers (≈66%), reaching people nearby (≈43%), and boosting sales (≈34%). Looking beyond individual transactions, around 84% say that online ads allow them to compete with larger or more established rivals. That balance between small and large competitors is what a level playing field should mean in practice.

Across Europe, this model of fair, competitive and responsible business is now under scrutiny as policymakers debate the Digital Fairness Act. The goal of stronger consumer protection is widely shared, and striking the right balance between protecting citizens and enabling entrepreneurship is never simple. Concerns about manipulative design and opaque consent flows are real and must be addressed through firm enforcement of the DSA. At the same time, the debate raises crucial questions about the future of the very tools that small businesses depend on to reach customers. For SMEs in the CEE and beyond, this is not just another legislative exercise in Brussels; it is a decision that could directly shape how they compete, grow, and remain visible in a crowded marketplace.

Europe already prohibits sensitive-data targeting and advertising to minors under the DSA, and those rules should continue to be firmly enforced. But if new measures go so far as to make everyday, consent-based personalisation unworkable, SMEs will be the first to feel the impact. The survey shows that nearly half expect harm to customer acquisition (48%) and a drop in overall performance (46%) if targeting is restricted. These numbers translate into very practical consequences: hiring decisions, pricing, and product lines.

There’s another side to growth: measurement. Most advertisers in the survey track what works. Take that ability away, and many expect weaker campaigns and slower growth because they can no longer learn or adjust their spending. The logic is simple: targeting helps reach the right people; measurement shows whether it worked. Within the guardrails of the GDPR and the DSA, SMEs need – and benefit from – both.

That means preserving what works within Europe’s strong standards: lawful, consent-based personalisation for adults; harmonised consent flows that reduce friction without undermining rights; and privacy-preserving measurement that allows a small shop to see whether last week’s spend paid off. These are not privileges, but essential tools embedded in Europe’s high-standard framework.

This is also a call for competitiveness. Europe can enforce robust protections while still supporting its entrepreneurs. The data here do not come from platforms; they reflect the daily reality of SMEs in Slovakia, Czechia, Poland, Hungary, Lithuania and Croatia striving to prosper under a high-standard regime. If the rules make consent-based tools unusable, the cost will not fall on “big tech” alone. It will land on the businesses we rely on to hire locally, serve their communities, and sustain local economies.

The Commission is listening. The DFA consultation closes on 24 October. SME voices must be heard in this process, and policymakers should ensure that the final proposal protects citizens while still giving Europe’s smallest businesses a fair chance to compete. That balance is possible – and the evidence shows it.

 

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