The growing regulation of the digital economy in the European Union and the Czech Republic brings benefits such as greater integration of the single market, the removal of certain barriers, and increased security. At the same time, however, it creates a disproportionate administrative burden that slows competitiveness and innovation. This is largely a consequence of the legislative “tsunami” between 2019 and 2024, whose negative effects are also highlighted in the Draghi Report. In response, there is increasing discussion about the need to reduce bureaucracy, which costs companies tens of billions of Czech crowns even in Czechia. One possible solution is a shift toward so-called smart regulation—based on principles rather than detailed technical rules—along with the use of regulatory sandboxes and closer cooperation between the public sector and businesses when designing regulatory frameworks.

Key takeaways:

• Regulation and competitiveness: Between 2019 and 2024, the EU adopted many complex rules which, according to Mario Draghi’s report, have contributed to declining competitiveness and weaker innovation among European firms.
• Regulatory impacts: Since 2010, around 100 digital-services legislative proposals have been introduced in the EU. While some strengthened the single market, consumer rights, and security, they also increased costs and administrative burdens for companies.
• Smart regulation: Future legislation should be more flexible—based on principles rather than detailed technical rules—and support innovation through tools such as RegTech and regulatory sandboxes.
• Public–private cooperation: The state should better quantify compliance costs, while companies should engage earlier in the legislative process.

Policy Paper – Ondřej Kovařík

The analysis is in PDF under the link below.