She’s even come up with a name for it: technological sovereignty.
“It is not too late to achieve technological sovereignty in some critical technology areas,” von der Leyen outlined in her pitch for the incoming Commission, which is expected to take its seats by the end of this year following setbacks for several of her key nominees. “We will jointly define standards for this new generation of technologies that will become the global norm.”
For some (particularly in France and Germany), the move can’t come soon enough. Over the past decade, EU lawmakers and executives from legacy industries have looked on warily as U.S. — and, increasingly, Chinese — tech companies have out-muscled the region’s firms in the digital Great Game.
London, Berlin and Paris can all claim their fair share of startups worth at least $1 billion. But these figures are still dwarfed by those of Silicon Valley and China. The ongoing distrust in many EU policy circles of U.S. tech giants and their dominance over everything from social media and online search to cloud computing and e-commerce also has rekindled a protectionist zeal that many thought had been discarded long ago.
Von der Leyen has set the bullish tone for the new Commission. But the more assertive policymaking is likely to be driven by her executive vice president for digital, the Google-thumping antitrust czar Margrethe Vestager, and whoever ultimately fills the job of internal market commissioner following the rejection of French pick Sylvie Goulard.
Paris’ new nominee for the job, ex-Finance Minister Thierry Breton, is a forceful advocate of much more protective policies on everything from data localization — he’s said that European data should stay in Europe — to fostering EU-born digital champions. That’s not surprising with his background as the former head of France’s ex-telecoms monopoly and boss at Atos, a French tech and cybersecurity firm.
Europe “need[s] a digital policy and a real industrial policy at European level,” Breton, who still needs to be confirmed by the European Parliament, told French business daily Les Echos earlier this year.
He’s also taking aim at Silicon Valley.
“My conviction is that these empires will not be able to stay as they are,” Breton added in a shot across the bow at digital giants like Google and Facebook. They “capture too much value.”
Digital hearts and minds
What’s at stake here is a gear-shift in European digital policymaking — which lawmakers have eagerly exported to the rest of the world (excluding China) via tougher privacy standards, competition rulings and calls for tighter policing of online content.
Those moves helped to establish Brussels as a global first-mover on tech regulation, as Washington largely stood still.
But they did little to improve Europe’s standing in the global digital race against China and the United States. Alarmed by Europe’s ever-growing dependence on foreign tech companies, a new generation of policymakers embodied by von der Leyen wants to take things a step further — by taking more active measures to protect Europe’s market.
They see how China and, to a lesser extent, the United States have used economic policies to promote national digital champions. The thinking in Brussels now holds that, if Washington and China are throwing out the rulebook on international trade and support for home-grown industry, Europe might as well start getting more assertive, too.
That means using every trick in the book to give the 28-member bloc a fighting chance to compete globally, including blocking potential foreign takeovers in so-called strategic industries, promoting government-funded tech initiatives and rewriting antitrust rules to allow local players to gain global scale to take on foreign competitors.
Paris and Berlin are throwing their weight behind this approach. They believe in a more aggressive pushback to the dominance of foreign (read: American) firms over vast sections of the digital economy.
Up until now, these instincts had been kept mostly in check by more liberally economic EU countries, notably the United Kingdom. But in a quirk of fate, Britain’s pending departure of the bloc has dampened protests to more interventionist digital rule-making, with many smaller countries (that often house tech giants’ European headquarters) feeling less emboldened to fight their corner.
“We need France and Germany’s support on a range of things, including on Brexit,” said a senior EU diplomat who spoke on the condition of anonymity because he was not authorized to speak publicly. “We care about what happens to the digital economy. But we care about other priorities more.”
Protectionism in all but name
Europe’s technological sovereignty is already taking shape.
As more of the economy is powered by online data, EU policymakers are questioning why most of these valuable data flows run on digital infrastructure owned by the likes of Amazon and Google. The fear is that such U.S. dominance of so-called cloud computing could leave the region vulnerable to lax privacy standards and see local competitors miss out on an industry that is expected to be worth half a trillion dollars globally by 2023, according to IDC, a data provider.
Already, the Germans and French have thrown their backing behind Gaia-X, an EU-backed cloud-hosting service, to reduce the region’s reliance on foreigners. The countries’ joint efforts to create a European rival to Google, known as Quaero, were quietly scrapped in 2013 after receiving millions of euros in government grants with little, if any, impact on the search giant’s dominance.
Paris also recently enlisted two local firms to draw up plans to break the U.S. dominance of cloud computing with proposals expected to be published in December — an initiative in line with Breton’s thinking on data localization (the likes of Russia, Turkey and Brazil had passed similar rules). A separate push by Orange, the country’s largest telecoms carrier, failed to gain much traction and will be shut down in early 2020.
For Michael Jackson, an American venture capitalist who has spent more than a decade living in Europe, such plans epitomize the region’s ham-fisted tactics to help the local digital economy.
Officials already have all the powers they need to help local startups grow. They could revamp the Continent’s complicated labor laws that vary widely between countries, overhaul how workers for fledgling companies pay tax on potentially lucrative stock options and invest heavily in the region’s often creaking digital infrastructure.
But such practical policymaking doesn’t win headlines or votes. So European policymakers are reverting to type by promoting a 21st century version of protectionism that keeps foreigners out and which, he says, will mostly help traditional companies just as they’re facing increased competition from upstart digital rivals.
“It’s blatant protectionism,” said Jackson, who’s behind a new project in Paris to help local startups gain a footing. Technological sovereignty “is clearly for the benefit of legacy players, not to help Europe compete. It’s the same old story that we’ve heard before.”
Mark Scott is chief technology correspondent at POLITICO.
This report first appeared on politico.eu on Oct. 27, 2019.