Europe’s rocky road to digital sovereignty

Europe’s dependence on foreign technology is not merely a political talking point. A Bertelsmann Foundation policy brief says more than 80% of the continent’s digital infrastructure, microchips and artificial intelligence models originate outside the European Union.

Europe still has strengths in mid-tech industries such as automotive manufacturing, but it lags in artificial intelligence, semiconductors and cloud computing. Only four of the world’s 50 leading technology companies are European, and none was founded in the past 50 years.

The cloud infrastructure gap is especially stark. European investment totals 750 million euros, compared with 100 billion dollars provided by US companies such as Microsoft and OpenAI. Alexandra Geese, a European Parliament member who advocates strengthening European digital companies, says investors and entrepreneurs often view the region as uncompetitive. “You often hear from the CEOs of tech companies: ‘Europe can’t do it.’”

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Capital providers and entrepreneurs often assess Europe as uncompetitive in the market.

The shortage of venture capital further limits the growth of European deep-tech start-ups. The EU receives only 5% of the world’s available venture capital, compared with 52% for the United States and 40% for China. As a result, 30% of European unicorn start-ups have moved abroad over the past 15 years, mainly to the United States.

The same dependence affects telecommunications. Connect Europe’s report, “State of Digital Communication 2025,” puts the value of Europe’s market for telecommunications services, network equipment, content and applications at about 1 trillion euros in 2023, equal to roughly 4.7% of European gross domestic product. Agriculture, fishing and forestry together account for 1.7%, while the automotive sector represents 7%.

The report describes Europe’s connectivity ecosystem as important to the continent’s competitiveness, sustainability, security and resilience. The article argues that Europe must invest in key technologies if it wants to reduce its external dependence, while the geopolitical situation could provide an additional push.

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Europe can’t do it.