Can Europe Survive Without Its Own Big Tech?

This article was published on 2 April 2025 in i-Bestuur as an opinion piece: https://ibestuur.nl/artikel/kan-europa-overleven-zonder-eigen-big-tech/

If Europe wants to survive economically in the digital age, it must develop its own large international Big Tech companies and a European digital ecosystem. Simplifying the many regulatory and fiscal barriers within Europe, along with creating a dynamic European capital market, are urgent steps needed to retain and scale promising European enterprises. In parallel, active government policy should prioritise awarding service contracts to European companies rather than American ones. Security and digital sovereignty are crucial, according to an informal group of (former) IT professionals calling themselves the “Taskforce Sovereign Digital Europe”.

Europe’s IT Lag

It is abundantly clear that Europe is far behind global superpowers such as the US and China in the field of IT and related services and developments. This is in a world increasingly dominated by digitalisation. This reality has been widely acknowledged for years. So far, the EU has mainly responded to this tsunami with defensive regulations aimed at mitigating the risks of rapid IT developments for citizens and businesses, such as the GDPR, DSA, DMA, and AI Act. Driven by the Draghi report, the focus has only recently begun shifting—rightfully so—towards the urgently needed innovation in IT and the development of independent European IT companies.

EuroStack

In line with this shift, Europe has initiated the development of a so-called EuroStack. An IT stack encompasses all layers of IT products and services, starting with raw materials, through hardware, operating systems, and up to the highest levels of software, apps, and more. Both China and the US, along with Big Tech companies, aim to dominate all these layers that are crucial for new IT products and services. With the same intent, raw materials are being monopolised—China secures rare earth metals through a series of contracts in Africa, while Trump, through power politics, sought control over similar metals in Ukraine. It is therefore high time for Europe to take its IT stack seriously and secure its grip on these crucial layers for its own independence. From this perspective, the EuroStack initiative is a welcome development.

Big Tech Dominance

But is this enough? American Big Tech companies, in addition to government efforts, have all secured global contracts for every layer of the IT stack relevant to their domain. In reality, Big Tech companies, more than their governments, control the entire chain of IT stack layers necessary for further development of their products and services. Each new development leads to new contracts with other countries and suppliers. Globalisation is by no means declining; it continues to expand, further entangling the world in millions of contracts between businesses and governments. However, be warned—this is all within the framework of a zero-sum game that benefits the Americans.

Big Tech as a Source of Innovation

Europe’s problem is that it lacks broadly established Big Tech companies like those in the US and, to some extent, China. These companies are the primary source of crucial innovation, driving countless economic and societal advancements, and they also act as the orchestrators of their own IT stacks. It is imperative for Europe to develop a EuroStack with the support of the European Commission, but the key question remains whether this alone will be sufficient to stimulate innovation and the related IT products and services.

Cloud Services

Take cloud services as an example. Virtually all businesses, governments, and citizens in Europe rely on American cloud services. This is one of the key reasons for the growth and prosperity of American Big Tech firms. The services are perhaps of high quality, reasonably reliable, and functionally rich. So why should these companies not be favoured? However, this reliance means that Europe is missing out on significant opportunities. Firstly, billions in revenue are being transferred to Big Tech companies, revenue that could have remained within Europe. Secondly, Europe is failing to build its own expertise. Thirdly, jobs are being created outside Europe. With the shifting political climate in the US, storing our data in the US or on servers owned by American companies is increasingly becoming a security and business continuity risk. The US now has the ability to access our data, and American Big Tech companies are actively working to soften European regulations as they see them as a limitation to their market power. Lastly, by outsourcing IT to the US, Europe is severely compromising its capacity for innovation. Why leave the work to others? Europe is fully capable of providing such services itself through large domestic IT firms that allow for independent agreements on regulation, security risks, and innovation.

IT Companies as Digital Utilities

As the world becomes ever more digitalised, large IT companies are creating their own ecosystems—platforms that are becoming increasingly vital for the functioning of society, effectively turning them into digital utilities. No individual, business, or government can operate without robust IT systems. Without powerful homegrown IT firms, Europe risks falling further behind the US and China, facing ever-greater security threats, and ultimately encountering economic and security stagnation. This is, therefore, a matter of the highest strategic priority. Europe has taken radical steps to eliminate its dependence on Russian oil and gas. Dependence on American (and to a lesser extent, Chinese) IT systems and cloud services is just as dangerous.

European Big Tech

Europe must therefore take action to establish its own large-scale IT companies and cannot resign itself to the idea that this battle is already lost. Sufficient IT expertise still exists within Europe. Universities conduct excellent research. Significant developments are taking place in photonics, quantum computing, AI, and more. However, promising European IT companies consistently migrate to the US as soon as they reach the stage of maturity. Time and again, we hear that securing venture capital for growth is not an issue in America. Another obstacle in Europe is that companies are “trapped” by regulations and tax structures within individual member states. The process of scaling a national company into a European Big Tech firm is far too cumbersome, which is a major reason why many promising IT startups leave for the US.

Measures

If Europe wants to survive economically in the digital age, it must establish its own large international Big Tech companies and a European IT ecosystem. Simplifying the myriad regulations and tax barriers in Europe and creating a dynamic European capital market are urgent steps to retain and scale promising enterprises. In parallel, active government policies must prioritise awarding contracts to European companies instead of American firms. Security and digital sovereignty are crucial!

Taskforce-Digital-Sovereign-Europe: Paul Timmers, Willem Korteweg, Joost van Iersel, Joost van Boeschoten, Peter Hagedoorn
Wednesday, 2 April 2025