Europe is seeing an increasing push to establish technological sovereignty and reduce the region’s reliance on US technology. However, there’s always been an undertone of acceptance that the EU is years behind the US when it comes to technological innovation and advancements.

Now, the European Commission is planning to acknowledge this publicly. The EC will introduce a new International Digital Strategy, which will focus on collaboration with the United States and other tech-forward countries, such as Japan, South Korea, and India.

The lawmakers believe that “decoupling” from the West is unrealistic and will instead push Europe further back in the technological race.

Several prominent political leaders and lawmakers have advocated for European sovereignty over technology and artificial intelligence. 

For instance, Emmanuel Macron, the president of France, said in a speech in 2024 that Europe’s strategic autonomy is a conscious choice to end the region’s dependence on others. In an earlier speech, he also said that if Europe fails to build champions in areas such as digital and artificial intelligence, its choices will be dictated by others. 

Similarly, Thierry Breton, the former EU Commissioner for Internal Markets, said that digital spending in the EU will breach the 20% target, underlining the importance of investing in European tech sovereignty.

He focused on Europe’s declining market share in the semiconductor industry and called for the development of groundbreaking European tech.

The Eurostack movement in the EU has also been gaining a lot of traction and support from various think tanks, academic researchers, and industry voices.

Eurostack staff calls for the development of an indigenous infrastructure stack in the European region, including cloud, AI, semiconductors, digital services, and data centers. The main aim is to reduce Europe’s dependence on Chinese and US technology.

This growing concern among EU well-wishers is quite understandable. Excessive reliance on the United States puts the US (meaning Donald Trump) in a controlling position, where he can arm-twist the European Union in matters of trade and even politics. 

We have already seen an example of this during the tariff war, where Trump imposed a 25% tariff on automobiles (and their parts) and steel and aluminum products imported from the EU.

Also, the fact that Google, Microsoft, and Amazon account for around 69% of the cloud market in the EU is quite concerning, too.

Europe Wakes Up to Reality

Despite positive speeches and statements by people in power in the EU, the fact remains that Europe is still lagging behind the United States. Bulgarian lawmaker Eva Maydell said that Europe should “sober up” and accept that the train has left the station.

Dan Nechita, the current EU director for the Transatlantic Policy Network, said that it’s not the right time to be politically absolute and say that “we are going to do everything in Europe.”

EU tech chief Virkkunen has been working hard to bring home the support of influential tech lobbies and emphasized the need to continue working with the United States.

To put it in a nutshell, the European Commission is ready to accept the fact that the damage is done, and now Europe needs to play second fiddle and forge strategic partnerships with key technological leaders (primarily in the US) to stay alive in the race.

Lack of Investments and the EU’s Regulation-First Approach

One of the major reasons behind the European Union’s sluggish tech development is the lack of venture capital investments in the region. As per an IMF post, EU VC funds raised around $130B between 2013 and 2022. During the same time, the US raised $924B. 

Similarly, annual VC investments in the EU are only 0.2% of the GDP when compared to 0.7% in the US. Currently, the United States accounts for a massive 52% of the global VC funds, whereas the EU holds just 5%. 

Lack of investments has forced European startups to look elsewhere, especially the United States, for funding and support. One of the major reasons for such low venture capital interest in Europe is its diversity.

Each of the 27 countries in the EU has its own regulatory and legal challenges, which make it difficult for multinational corporations to operate in the region. 

Plus, the EU has adopted a regulation-first approach, which is very different from the United States. Of course, this approach has its own merits, but it has surely slowed down the speed of technological investments in the region. 

For instance, the GDPR puts a truckload of regulatory and moral responsibility on companies to protect user data. Similarly, the AI Act focuses on the more ethical development of artificial intelligence that’s aligned with human values and refrains companies from exploiting public data.

Sure, all of these are positive tech regulations important to protect the long-term sovereignty of the public at large. Even global tech advocates have praised the EU’s efforts for the development of safe and ethical technologies. However, we cannot ignore the fact that this has come at the cost of sluggish tech investments and overall growth.

With its back against the wall, Europe needs to reassess its strengths and focus on areas such as open-source technologies, such as France’s La Suite numérique, and government-backed technological initiatives to have a say in the upcoming artificial intelligence and semiconductor race.