European Commission officials dubbed it Technology Independence Day, a set of proposals designed to derisk the continent from foreign digital providers.
Among other measures, the proposals would reserve sensitive public sector cloud computing contracts to European providers and use taxpayer money to build a cutting-edge European semiconductor factory. Open-source AI software, which the user can control, will be encouraged, at the expense of proprietary foreign models.
It underlines a stark shift in attitudes, driven by hostility to the Trump Administration and fear of Chinese economic power. As globalization comes under strain, Europe feels it has become uncomfortable, even risky, to depend on foreign sources for critical technologies. China dominates critical minerals. America dominates cloud computing and software.
Yet success from weaning off foreign suppliers is far from certain. Attempts to replace non-European tech, software, hardware, and services would cost, according to several recent estimates, between €3 and €5 trillion, without any guarantee of success. Americans alone produce some crucial products, including all AI semiconductors.
Another problem is that “digital sovereignty” has become a catch-all term, meaning wildly different things to different people. To some, it means substituting American and Chinese tech with home-grown suppliers. To others, it means ensuring security of supply and boosting European competitiveness and capabilities.
Start with security. A few years ago, a strong majority of European countries rejected similar French-led attempts to impose sovereignty requirements on cloud contracts. Then, in a widely reported incident, Microsoft acceded to pressure from the Trump administration and blocked the emails of members of the International Criminal Court. In response, the ICC dropped Microsoft as its provider, opting for Open Desk, a European open-source alternative. Three US cloud providers — Amazon, Microsoft, and Google — control 70% of the European cloud market.
Move on to competitiveness. Former European Bank President and Italian Prime Minister Mario Draghi sounded a clarion call in his European competitiveness report. Draghi reported that since the millennium, per capita disposable income in the US has reached almost twice as much as in Europe.
The main culprit, according to Draghi? Europe’s lagging productivity is due, above all, to lagging tech adoption. The European Central Bank attributes two-thirds of the productivity gap to tech. The productivity of US-listed tech firms increased by about 40% in the last 20 years, while the productivity of EU-listed tech firms was stagnant.
The Commission hopes its package will increase the substitution of European for American products. Speaking just after the package went live in the European Parliament’s industry committee, the EU’s tech chief Henna Virkkunen said the Commission had “identified 100 different services where we also look for European alternatives.” The Commission said it would “test laptops powered by alternative operating systems amongst its staff.”
Given the divergent economic and security motivations for pursuing “tech sovereignty,” the Commission’s package unsurprisingly left everyone half-happy and half-unhappy. US tech denounced the plans as protectionist and discriminatory, while European digital sovereignty leaders such as Eurostack found it too timid.
Rather than helping Europe catch up in the AI competition, American tech organizations warned that the plan will leave the continent dependent on second-rate technology.
“By excluding trusted international technology providers based on their headquarters location and organisational structure, the Commission forces users to rely on a much more limited selection of digital products,” warned the Computer & Communications Industry Association. “Europe’s digital ecosystem will only thrive if its compute capacity can scale at global speed and real demand for cloud and AI services is allowed to grow.”
European firsters, including pro-tech voices, criticized the lack of explicit Buy European clauses and the small sums of public subsidies for AI industries. “I would have liked to hear more clearly from the Commission that the US is not a trusted partner anymore for the European public sector, like China isn’t,” Aura Salla said during a committee hearing. Salla previously worked for Meta and has pushed hard to simplify Europe’s extensive tech regulations.
Heavy lobbying and tough negotiations lie ahead as the proposals make it to the European Parliament (which will probably toughen it) and the European Council (which might weaken it). Only one thing looks certain: Europe’s debate about weaning itself off foreign technology and boosting its digital performance will continue to spark a divisive transatlantic debate.
William Echikson is a Brussels-based non-resident Senior Fellow at CEPA and editor of the Bandwidth blog.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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