Europe Rises to the Tech Challenge: Forging a Future of Digital Sovereignty
As the world becomes increasingly interconnected, digital prowess is no longer just a luxury, it’s a necessity for European prosperity and security. But a wake-up call has sounded across the continent, highlighting a dangerous reliance on foreign tech infrastructure. Europe’s consumers, businesses, and even government operations rely heavily on a web of interconnected technologies – from the microchips powering devices to the vast data storage networks and the powerful computing clusters that drive innovation. The problem? Europe doesn’t control any of the fundamental components of this tech stack.
This lack of control became strikingly clear with the recent US election. It exposed the vulnerability of relying on another nation for the essential underpinnings of Europe’s digital world. As Mario Draghi highlighted in his report, a staggering 70% of new global wealth will be digitally driven over the next decade. Yet, Europe’s digital industry lags behind the US and China. This gap, if left unchecked, threatens to become an insurmountable chasm.
Recognizing this urgent need, Ursula von der Leyen has appointed Henna Virkkunen as the European Commission’s first-ever Executive Vice President for Tech Sovereignty, a clear sign that digital autonomy is now a top priority. But there is no clear roadmap for achieving this autonomy, and simply adding more regulations won’t solve the problem.
European regulators are already struggling to enforce existing rules. Social media giants routinely violate GDPR regulations, and tech behemoths openly defy the DMA and DSA, the EU’s groundbreaking digital regulations. Imposing further restrictions on these American giants could escalate tensions, leading to retaliatory tariffs or, worse, compromising security cooperation.
Empowering Europe’s Digital SMEs: The Path to Independence
The solution lies in a collaborative effort between Europe’s governments and its private sector. An overarching industrial strategy is needed, aligning their goals to create what could be called "the eurostack"—Europe’s own independent technological ecosystem. This requires a toolbox of solutions, including strategic investments, government procurement policies that favor European companies, the establishment of clear standards, incentives for innovation, and robust public-private partnerships.
While Europe’s tech sector is highly fragmented and lacks the sheer scale of its US or Chinese counterparts, it is not lacking in innovation or technological prowess. Governments must provide strategic direction and support to help these smaller players band together and compete effectively.
The key to unlocking Europe’s digital future lies with its small and medium-sized enterprises (SMEs).
As the European DIGITAL SME Alliance put it: "SMEs represent 99% of European business." These agile companies are the driving force behind European digital innovation, particularly in the business-to-business sector. They provide the software and services that power the digital transformation of other businesses and government agencies, especially smaller ones.
By strategically placing its digital SMEs at the heart of its technology strategy, Europe can not only achieve true digital sovereignty but also emerge as a global leader in the digital economy.
The DIGITAL SME summit, taking place on December 10th at the European Economic and Social Committee, will bring together leading experts, industry players, and policymakers to discuss the path toward European digital sovereignty.
"Europe needs an ambitious and coherent “eurostack” strategy, where European tech SMEs will be at the heart of delivering the digital public infrastructure that will unleash innovation and enable European digital sovereignty." – Sebastiano Toffaletti, Secretary-General of the European DIGITAL SME Alliance.
