Europe's tech sovereignty needs competitiveness

Observer

13-04-2025

As part of his confrontational stance towards Europe, US President Donald Trump could end up weaponising critical technologies. The European Union must appreciate the true nature of this threat instead of focusing on competing with the US as an economic ally. To achieve true tech sovereignty, the EU should transcend its narrow focus on competitiveness and deregulation and adopt a far more ambitious strategy.
After passing several landmark tech bills in recent years, the EU is now seeking to boost innovation and enhance competitiveness. Building on former European Central Bank president Mario Draghi's influential 2024 report, the European Commission recently published the Competitiveness Compass – its road map for implementing Draghi's recommendations.
Europe's growing anxiety about competitiveness is fuelled by its inability to challenge US-based tech giants where it counts: in the market. As the Draghi report points out, the productivity gap between the United States and the EU largely reflects the relative weakness of Europe's tech sector. Recent remarks by European Commission President Ursula von der Leyen and Tech Commissioner Henna Virkkunen suggest that policymakers have taken Draghi's message to heart, making competitiveness the central focus of EU tech policy.
But this singular focus is both insufficient and potentially counterproductive at a time of technological and geopolitical upheaval. While pursuing competitiveness could reduce Big Tech's influence over Europe's economy and democratic institutions, it could just as easily entrench it. European leaders' current fixation on deregulation – turbocharged by the Draghi report – leaves EU policymaking increasingly vulnerable to lobbying by powerful corporate interests and risks legitimising policies that are incompatible with fundamental European values.
As a result, the European Commission's deregulatory measures – including its recent decision to shelve draft AI and privacy rules, and its forthcoming 'simplification' of tech legislation including the GDPR – are more likely to benefit entrenched tech giants than they are to support start-ups and small- and medium-size enterprises. Meanwhile, Europe's hasty and uncritical push for 'AI competitiveness' risks reinforcing Big Tech's tightening grip on the AI technology stack.
It should come as no surprise that the Draghi report's deregulatory agenda was warmly received in Silicon Valley, even by Elon Musk himself. But the ambitions of some tech leaders go far beyond cutting red tape. Musk's use of X (formerly Twitter) and Starlink to interfere in national elections and the war in Ukraine, together with the Trump administration's brazen attacks on EU tech regulation, show that Big Tech's quest for power poses a serious threat to European sovereignty.
Europe's most urgent task, then, is to defend its citizens' rights, sovereignty and core values from increasingly hostile American tech giants and their allies in Washington. The continent's deep dependence on US-controlled digital infrastructure – from semiconductors and cloud computing to undersea cables – not only undermines its competitiveness by shutting out homegrown alternatives, but also enables the owners of that infrastructure to exploit it for profit.
Even more alarmingly, Europe's technological dependence gives a handful of corporations and the US government outsize power over its technological development and democratic decision-making. This power could be used to stifle the growth of Europe's tech sector by restricting access to advanced chips, or by making access to cloud computing contingent on light-touch regulation of US tech firms.
Safeguarding Europe from such coercion will ultimately enhance its competitiveness. Strong enforcement of competition law and the Digital Markets Act, for example, could curb Big Tech's influence while creating space for European start-ups and challengers to thrive. Similarly, implementing the Digital Services Act and the AI Act will protect citizens from harmful content and dangerous AI systems, empowering Europe to offer a genuine alternative to Silicon Valley's surveillance-driven business models.
Against this backdrop, efforts to develop homegrown European alternatives to Big Tech's digital infrastructure have been gaining momentum. A notable example is the so-called 'Eurostack' initiative, which should be viewed as a key step in defending Europe's ability to act independently. In an increasingly volatile geopolitical landscape, sovereignty is about more than competitiveness; it is about security, resilience and self-determination. European policymakers must therefore weigh competitiveness against other, often more important, objectives. A 'competitive' economy holds little value if it comes at the expense of security, a fair and safe digital environment, civil liberties and democratic values.
Fortunately, Europe doesn't have to choose. By tackling its technological dependencies, protecting democratic governance and upholding fundamental rights, it can foster the kind of competitiveness it truly needs. @Project Syndicate, 2025
Max von Thun
The writer is Director of Europe and Transatlantic Partnerships at the Open Markets Institute
Marietje Schaake
The writer is a former member of the European Parliament, is International Policy Director at Stanford University's Cyber Policy Centre, International Policy Fellow at Stanford's Institute for Human-Centered Artificial Intelligence