Europe Says it’s Not Set Up to Succeed Globally on Tech

Mark Scott is a contributing editor at Tech Policy Press.

The European Union just gave itself a failing mark on tech.

As part of an annual report published June 16 on the state of the bloc’s digital prowess, the European Commission laid bare the challenges that one of the Western world’s largest economies still faces in keeping pace with global competitors like the United States and China.

On artificial intelligence, the bloc was less than a quarter of the way to its stated goal of dominating vast swathes of this emerging technology by the end of the decade, according to the analysis. On next-generation telecommunications networks, EU officials criticized a lack of investment within individual member countries to unlock superfast data connections. On investment, the European Commission said ongoing fragmentation in the bloc’s capital markets had hamstrung billion-euro bets on startups from Poland to Portugal.

Above all, however, the report, known as the State of the Digital Decade 2025, claimed the EU’s ongoing dependence on foreign technology providers in areas like semiconductors, cloud computing and online platforms was fast becoming a strategic liability at a time when global political tensions have gone from a simmer to boiling point.

“Geopolitical shifts are turning the EU’s digital supply chain dependencies into strategic vulnerabilities,” the report concluded. “Technology sovereignty has moved to the forefront of the EU agenda.”

The yearly report into the health of Europe’s digital ecosystem marks the half-way point in the bloc’s so-called “Digital Decade,” or 2030 targets aimed at boosting tech skills across the region, incentivizing investment in local startups, and harnessing emerging technologies like AI and quantum computing for economic and social gains.

There’s nothing the EU likes more than to set top-down targets from its central nerve center in Brussels.

That includes training 20 million “ICT specialists” by the end of the decade; urging three-quarters of European businesses to adopt cloud computing and AI infrastructure over the same time period; and securing a 20 percent global market share in cutting-edge microchips by 2030.

Until recently, Brussels earned its swagger by setting digital rules associated with privacy, social media and digital antitrust that many officials hoped would become global de facto standards.

Yet amid the EU’s ongoing economic stagnation and growing wariness on a reliance on US tech firms, the bloc is pivoting hard — exemplified by a competitiveness report from former Italian prime minister Mario Draghi published last Fall — toward cutting regulatory red-tape, investing billions of euros in digital public infrastructure and seeking to harness tech as a means to jumpstart the Continent’s economy.

This week’s update on Europe’s digital ambitions wasn’t all bad news.

The bloc now has eight publicly-funded supercomputers spread from Finland to France — with more on the way. Semiconductor manufacturers are setting up shop locally, spurred on by lucrative EU-funded subsidies. A so-called “European digital identity wallet” is being piloted to allow businesses and citizens to access legally-binding documents from across the 27-country bloc.

And yet the underlying message from the European Commission’s assessment was that the bloc was not set up to harness fast-changing tech developments for economic gain. Its ongoing dependencies — particularly linked to cloud computing, cybersecurity, and microchips — on once trusted partners like the US (which, pointedly, was not mentioned by name in the report) were also now threatening European security.

“Persistent strategic dependencies threaten the EU’s economic security and technological sovereignty,” according to the report.

To overcome these obstacles, the European Commission was uncharacteristically blunt.

Fixing long-standing structural problems like fragmented national capital markets, an unwillingness of private capital to back European startups and limited coordination between EU member governments on Continent-wide digital infrastructure spending were fundamental if Europe wanted to maintain any semblance of global competitiveness alongside China and the US.

What the report didn’t lay out, however, was how to achieve those goals.

For years, Brussels has championed glitzy new digital rules — and with proposals linked to the Digital Fairness Act and Digital Networks Act, continues to do so.

But the complexities of corralling the different interests of all 27 EU member countries have made it difficult, if not impossible, to fix some of the underlying structural deficiencies that were highlighted in this week’s annual report on the bloc’s digital aspirations.

For that to happen, national capitals would inevitably need to give up control of core competencies, be that oversight of how telecommunications spectrum is auctioned off to cellphone carriers at a domestic level or control over local financial markets upon which national firms rely to meet their funding needs.

Those structural challenges — again made clear by the European Commission as a major roadblock to the EU’s tech ambitions — can not be overcome by overlaying another generation of Continent-spanning digital rules on what is already a crowded docket of tech-focused legislation.

It will require tough decisions by EU member countries about what powers they are willing to hand over to EU institutions, many of which are now openly viewed with skepticism by European voters, and what digital policymaking levers they want to keep for themselves.

Until those hard questions are answered, it’s likely that, when the 27-country bloc gets its digital report card next year, the EU will continue to punch well below its weight compared to its global rivals.