Necessity of Net Neutrality for the Startup Ecosystem in Europe – Euractiv

The free and open internet is the engine of innovation and growth. The internet as we know it has made it easier to start an online business than it was to open a brick-and-mortar coffee shop. The entry costs of businesses are now so low that startups can compete with larger, incumbents on the basis of their products and services, not just the size of their pockets. Therefore, in today’s digital age, the vitality of the European economy increasingly depends on its ability to support innovation and maintain an open, competitive market. The European Commission’s white paper “Meeting Europe’s Digital Infrastructure Needs” underlines the need for a strong digital framework. However, recent discourse on the potential introduction of network charges poses a serious threat to this vision. Maintaining net neutrality is of paramount importance, especially for startups, which are the foundation of innovation, growth and strategic autonomy in the European Union.

David de Bakker is a junior campaign director at Allied for Startups

Net neutrality, the principle that Internet service providers (ISPs) must treat all data on the internet the same way, is essential to ensuring a level playing field. For startups, this principle is not just a regulatory preference but a fundamental requirement for survival and competitiveness. Unlike established corporations, startups do not have the initial capital to pay telecoms for priority access to network resources. They will never be able to compete with the financial power of larger incumbents and would be vulnerable to restrictions on consumer access to their services. This would perpetuate the market dominance of incumbents and ensure that startups could never challenge them.

The proposed introduction of network charges would fundamentally undermine the principle of net neutrality in Europe. The principle of “paying for access” inherent in this proposal firmly entrenches the principle of the financial relationship between ISPs and entities providing services on the Internet. This will create a multi-tiered Internet in which only the wealthiest players will be able to afford to compete, effectively stifling smaller companies before they have a chance to innovate and grow.

The detrimental impact of network fees on startups cannot be overstated. These fees would impose significant financial burdens, diverting critical startup resources away from R&D, talent acquisition, and market expansion. Startups drive innovation by challenging the status quo and bringing breakthrough technologies to market.

In dual-use technologies—technologies that can serve both civilian and military applications—startups are also playing a key role. From quantum computing and cybersecurity to artificial intelligence, these innovations are essential to both the EU’s economic prosperity and security. By undermining startups’ ability to compete, network fees would significantly hamper the development of these key technologies in the EU, threatening the bloc’s strategic autonomy and security.

In addition, network fees would exacerbate the already significant challenges startups face in scaling their operations. The European startup ecosystem, while vibrant, is still in its infancy compared to its counterparts in North America and Asia. Introducing financial barriers would widen this gap, making it harder for European startups to reach a global audience. This imbalance would not only hinder economic growth, but also lead to a so-called “brain drain” as entrepreneurs and talent move to more supportive environments, further weakening Europe’s competitiveness.

The economic implications of stifling startup growth are also profound. Startups are key drivers of job creation and economic growth. They contribute significantly to employment, innovation and economic diversification. By supporting a robust startup ecosystem, the EU can ensure sustainable economic growth and resilience to economic shocks. In turn, network fees would consolidate market power in the hands of a few large corporations, reducing market dynamism and consumer choice.

Moreover, the security implications of undermining startups are equally troubling. Europe’s open strategic autonomy relies on its ability to innovate and maintain technological self-sufficiency. Startups are at the forefront of developing technologies that enhance both civilian and military capabilities. A weakened startup ecosystem would leave

Europe is vulnerable, dependent on external technologies that may not be aligned with the EU’s strategic interests and values. Ensuring that startups can thrive without the burden of network fees is therefore a matter of economic and military security.

In short, preserving net neutrality is not just about keeping the internet open; it is about protecting Europe’s economic future, innovation potential and strategic autonomy. The European Commission must recognise that introducing network charges would disproportionately harm startups, stifle innovation and ultimately undermine the EU’s long-term goals. By promoting net neutrality, Europe can create fertile ground for startups to flourish, driving economic growth, increasing security and ensuring that the EU remains a global leader in innovation.