It is needless to say that developments in the world are increasingly determined by digital progress. This encompasses a wide range of different aspects, from rapid developments in digital services and products to the significant influence of social media on society, from large-scale transformations in almost every industry to spectacular developments such as bitcoins and AI, as well as widespread cybercrime and other related matters.
The parties that stand out the most in this regard are the so-called Big Tech companies, predominantly based and originated in the United States. However, there are now also significant Big Tech giants in Asian countries, particularly China. Whereas classical industrial developments largely owed their growth and prosperity to the extensive physical infrastructure built in the previous century (transportation infrastructure, power grids, telecommunications), the digital world thrives and flourishes primarily thanks to the global internet and the services operating on it. The Big Tech companies dominate this world like digital utilities, and no organization or citizen can bypass their services. Furthermore, every new technology invented further emphasizes the importance of good internet connections with cloud services, as well as the dependence on Big Tech that controls them.
The world is grappling with the power that Big Tech has acquired as a result. On one hand, there are complaints and proposals to break up or otherwise restrain these companies. They are also accused of not caring enough about the interests, particularly the privacy, of their customers. On the other hand, everyone continues to use their mostly free services. But what do people really want? They don’t want to pay for services, but they still demand certain standards of service. One thing has become clear: Big Tech companies should be considered as utilities of the digital world and treated and regulated as such. This may mean that payment will be required for services, while digital utilities will have to comply with rules regarding privacy and service quality.
What is also becoming evident is that the world cannot function without these Big Tech companies anymore. Despite the criticism they face, they keep the entire digital world running, upon which every company, every individual, regardless of their wealth, and every government has become utterly dependent. Unbeknownst to many, these companies have established a position in the digitizing world in just a few decades, a position that no utility company in the classical industrial society has ever achieved. Only the major oil companies had a somewhat comparable power base in the industrial world.
Europe, unlike the United States and Asian countries, does not have any significant Big Tech companies. And as the economy rapidly transitions from the classical industrial world to the digital world, Europe finds itself empty-handed. Not only that, but Europe, its citizens, businesses, and governments, are entirely dependent on non-European Big Tech companies. And the situation will only worsen in the coming years, with new developments such as AI.
Without European Big Tech companies, Europe risks becoming a vassal state in practice, beholden to superpowers or large countries that possess globally operating Big Tech companies. European organizations, citizens, and businesses cannot avoid relying on the often excellent services of Big Tech companies outside of Europe for all their activities. However, this also means that more and more economic strength and power are shifting away from Europe.
It is a dangerous situation. Not using Big Tech services puts Europe at a disadvantage. After all, organizations cannot function without these services. However, relying on non-European Big Tech companies leads to an ever-increasing dependence and technological lag. It somewhat resembles the dependency Europe had on Russian gas. Using it boosted Russia’s coffers and benefited European industrial development. Not using it anymore puts Europe at a disadvantage unless Europe manages to become independent of Russian gas, which fortunately is happening. The same needs to happen in the digital realm: Europe must reduce its technological dependence on non-European Big Tech.
An important question is: how did it come to this? IT professionals from the previous century were already aware of the power held by major American IT companies like IBM, HP, and Oracle. Attempts by Ericsson, Nokia, and Philips to play a significant role all fell short. Europe will have to analyze why this happened and examine the mechanisms that led to our marginalization in the IT field as early as the previous century.
Now Europe finds itself trapped in this digital dilemma, facing an ever-growing technological gap, and the question arises: How do we escape this situation? Well, Europe is already leading globally and recognized in various digital legislations aimed at restraining the power of Big Tech. That is commendable, but it is primarily a defensive approach and does not in itself lead to Europe establishing its own strengths in the digital field. Additionally, numerous innovative initiatives are underway to ensure that Europe doesn’t fall further behind. Efforts are being made to stimulate AI developments, funding is allocated for photonics, robotics, and there’s the Gaia-X initiative aimed at creating a European cloud infrastructure. These are all interesting and desirable endeavors, but the question remains whether they will ultimately bridge the gap for Europe. Without powerful European Big Tech companies operating worldwide with strength, the chances are extremely slim that Europe will escape the digital quagmire.
Therefore, the question seems to be: Why aren’t there any Big Tech companies emerging in Europe? Why did Europe fall behind in technology during the previous century? What are the causes that prevent good, innovative companies from flourishing in Europe, almost always finding success outside the continent? After all, a significant amount of government funds are directed towards various startups. The knowledge and quality of certain universities, as well as graduates and professors, are praised. However, investors from outside Europe tend to reap the rewards. Many European companies find success on American stock exchanges. There is an urgent need for a thorough analysis in this regard.
The main cause for smaller companies not breaking through to a global level may perhaps be found in the still highly restrictive regulations rather than a lack of capital or talent. While Europe advocates for the free movement of people, services, and goods, in practice, it can be observed that almost all member states favor their own national companies and create barriers for foreign companies. The same applies to the movement of individuals. There are no European companies with their fiscal base in Brussels, paying their corporate taxes to Europe. Everything is organized at the national level. Member states prioritize inter-state competition over coming together to establish powerful European Big Tech companies. As long as this continues, start-ups will flee outside of Europe, and Europe will sink deeper into the digital mire.
All well-intentioned subsidy programs, project grants – they are all meaningless if Europe does not rapidly ensure that numerous start-ups transform into their own Big Tech companies, from which individuals, organizations, and governments in Europe and worldwide will extensively benefit. Because that is the strength of Big Tech companies: serving the global market with digital services. No European IT company is capable of doing so. And digital service provision is the key to further societal development and prosperity. The European Commission should promptly initiate efforts to analyze why success is achieved elsewhere while Europe struggles. Subsequently, based on that analysis, engage in discussions with member states to eliminate obstructive regulations at the national level and establish new European rules to foster the emergence of European Big Tech companies.