The European Union is facing growing pressure to reduce its reliance on U.S. technology, particularly in the crucial areas of cloud services, artificial intelligence, and microchips. The pressure for technological independence is driven by increasing transatlantic tensions and concern over the loss of strategic sovereignty. U.S. companies like Amazon, Microsoft, and Google now dominate the European cloud market with over two-thirds of the market share. At the same time, Europe represents just some 10% of the world microchip market, demonstrating its weak position in this area.
The EU’s dependence on American digital platforms not only undermines its strategic autonomy but also poses huge security risks. For instance, U.S. export controls on technology or the misuse of technology platforms could have a devastating impact on European operations. Moreover, regulatory conflicts are likely, especially under regimes like the Digital Services Act, which aims to control online content.
In order to address these challenges, Europe is seeking to establish its own fundamental digital industrial platforms and infrastructures. These initiatives like GAIA-X follow the establishment of a sovereign data infrastructure so that Europe can be in charge of data exchange according to European norms. Technological sovereignty will however require investments in priority sectors and strategic alliances on a gigantic scale. The EU will need to implement strong rules to support its tech industry without losing partners from overseas.
One of Europe’s key strategies is creating a separate path towards technological leadership that is distinct from that of the U.S. This involves putting responsible digitalization, social cohesion, and democratic values first. The EU needs to break its “middle-tech trap” wherein many European enterprises, even those in the automotive sector, are unable to innovate and expand globally due to market fragmentation and regulation barriers.
Deep technology, including areas like AI, quantum technologies, and materials science, is viewed as being crucial to the autonomy of Europe. The continent, however, suffers from poaching and retaining deep-tech talent because most European startups rely on American venture capital to expand. In order to counter this, Europe is developing its venture capital ecosystem tailor-made to its own market circumstances.
Deep tech investing is expanding in Europe, though it lags behind the U.S. More deep tech investment is coming from European companies, and many of these companies are sustaining or even expanding investment even during a time of economic recession. The EU Digital Europe Programme and initiatives like the European Chips Act are part of broader efforts to improve innovation and reduce dependence on foreign technology.
Ultimately, achieving technology independence for Europe will have to be a balancing act between innovation and regulation. Prioritizing strategic ownership, cooperation, and access to critical technologies, Europe is able to become more competitive without isolating itself from the global technology community. This will involve intentional assessments of technological dependencies and developing comprehensive strategies to ensure Europe’s freedom to operate in the digital realm.
