Calls for Government to focus on simplifying digital regulations 

Technology Ireland warns that digital compliance costs for firms are mounting — surging by more than 50% since 2013 alone

According to the firms surveyed, 44% said they spend €5m a year on complying with EU-wide digital regulation.

Lobby group Technology Ireland are calling on the Government to use its presidency of the EU Council to “facilitate meaningful discussions” around regulation as it warns compliance costs to firms has increased significantly over the last few years.

According to Technology Ireland’s report, produced by Frontier Economics, 36% of tech firms here said they saw their EU-wide digital compliance costs surge by more than 50% since 2023 alone. 

Of those firms surveyed, 89% said their costs would fall if regulatory frictions could be addressed in the future.

Firms identified four EU regulatory requirements that were causing friction between one another owing to them not being designed as a single integrated framework. 

These include cybersecurity legislation NIS2, product security and resilience regulations in CRA and DORA, as well as the Digital Services Act (DSA) and the Digital Markets Act (DMA).

“Each instrument may itself be coherent, however their interaction in practice can be complex, unpredictable and, at times, inconsistent,” the report said.

“For platform regulation, the DSA and DMA can require a platform operator to maintain separate compliance processes for content-related obligations and market conduct obligations, even where the same product feature is at issue.”

According to the firms surveyed, 44% said they spend €5m a year on complying with EU-wide digital regulation.

“On average across our entire sample EU-wide digital compliance costs accounted for 7% of annual EU-wide turnover in the most recent year,” the report said.

The report is calling for the Government to drive forward with simplification of existing digital legislation, consider the “opportunity costs to innovation in the EU”, and to push for appropriately resourcing regulators at both the national and EU levels to ensure they can proactively engage with industry.

Technology Ireland director Una Fitzpatrick said “regulatory frictions” are “driving up costs without improving compliance outcomes” while “overshadowing many opportunities”.

“With the presidency of the EU Council now underway, Ireland can leverage its honest broker status to facilitate meaningful discussions around better regulation, ensuring European competitiveness remains a core ambition and consideration for member states.

“Balancing clarity with consistency is the only way to ensure companies of all sizes can continue to invest, scale, and stay in Europe,” she said.

Digitally-intensive sectors employs around 332,000 people

The report also highlighted the size of digitally-intensive sectors in Ireland which it said employs approximately 332,000 people corresponding to about 13% of the total Irish workforce.

“Of these 332,000 workers, 171,000 workers were employed in sectors that produce digital goods and services, while around 161,000 were employed in sectors that intensively use digital Inputs,” the report said.

Ms Fitzpatrick added that every euro an “Irish company is forced to spend on navigating fragmented, unclear, or overlapping administrative hurdles is a euro directly diverted away from vital research, development, and scaling”.

“When compliance costs skyrocket in this manner, the primary casualty is the freedom to innovate.

“Instead of treating regulation and innovation as opposing forces to be balanced, the goal should be to leverage smart regulation as an enabler of a true Digital Single Market.”

Earlier this month, in an open letter a group of 50 academics called for the Government to recuse itself from negotiating legislation that could impact on digital policy during its Council of the EU presidency.

The academics questioned Ireland’s record and relationship with the multinational tech companies that base their European operations here and whether it could be an honest broker when these discussions come up.