Is Europe getting serious about ending tech dependence?

Europeans are afraid — very afraid — of their dependence on foreign digital technology.

A recent poll by the Bertelsmann Foundation finds almost three-quarters of EU citizens worry that critical digital services “could be remotely disabled by actors outside Europe”. The same overwhelming majority think it important Europe should have “control over key digital technologies”.

As in other cases (such as Europeans’ negative reactions to the EU trade “deal” with Donald Trump last year), the bloc’s citizens are clear about what they want — and it’s not what they are getting at the moment. So how are European governments, and the EU in particular, going about delivering the “control” that voters demand?

Europe depends on other economies for much of the digital technology “stack”: the US for software, Taiwan for microchips, China for swaths of hardware. A first question, then, is how much of the stack needs to be homegrown inside the EU.

When I ask this of Henna Virkkunen, the European Commission vice-president in charge of tech sovereignty, she lists AI models, semiconductors, quantum technology, satellites and the cloud as areas where Europe needs its own productive capacity. She does not go as far as self-sufficiency; the objective is “that we shouldn’t have risky dependencies [or be] dependent on one company or one third country”.

That is an ambitious list of sectors nonetheless, given how far behind Europe is. It is certainly sufficiently demanding that we must ask whether pursuing it would come at the cost of falling further behind and of giving up foreign frontier technology for the sake of inferior homemade versions. What does Brussels think about that trade-off?

It may not be that dramatic, Virkkunen suggests. “Sometimes we know that some companies . . . want to give the impression that they always have the best services and the competitors don’t . . . and it’s not always true,” she tells me.

She argues that the homegrown alternatives are sometimes just smaller and lesser known, rather than uncompetitive on quality or price. But that means the public sector can catalyse domestic substitutes by playing its role as a customer right.

Is the European public sector doing that, though? Many smaller EU-based digital companies feel they have a good product but government customers prefer to stick with the big providers they are used to. The commissioner accepts there is a degree of inertia. There is also a need to be “creative”, she says, to facilitate smaller companies coming together in consortiums to provide the scale of supply needed.

The biggest challenge, though, is access to funding for EU tech companies — not because of a lack of savings but thanks to Europe’s failure to channel financing to risky ventures. EU institutions as well as member states are starting to remedy this: a new scale-up fund is now operational and Brussels aims for more public-sector strategic “anchor” equity to crowd in private investors.

But so far the amounts being mobilised seem far too small compared to the hundreds of billions put into US tech investments every year. And by all accounts, talks over the EU’s next multiyear budget are whittling down further the amounts Brussels had originally proposed for new priorities including digital industrial policy.

On legislative reforms, too, from “EU Inc” (a pan-EU corporate entity) to localisation rules for sensitive digital services, member states are delaying or watering down proposals where Brussels already seemed to have been cautious not to ask for too much.

Virkkunen naturally avoids criticising national capitals. But she agrees that in the budget talks, “it’s very important that the member states keep the ambition there” for funding new technologies and defence. And not just to build domestic capacity, but because “the idea is that they should be able to compete globally”.

Ultimately Brussels, while ambitious, seems to be aiming somewhere in between how far voters want to go and how far national governments are ready to move. That means there are political rewards to be had for leaders bold enough to go further and faster. In the Bertelsmann poll, less than half of those asked think foreign providers are successfully held to European rules and expectations. It’s now up to politicians to convince them otherwise.

martin.sandbu@ft.com