That makes it impractical and useless to sell for different prices; if a digital good costs 50€ in Germany and 20€ in Italy, both Germans and Italians will buy it in Italy. Companies are therefore forced to sell it for 50€ to everybody. That hurts Italian customers.

Sure, if the digital services have a monopoly then this will occur. The thing, then, is to ensure you cannot setup monopolies like this.