Changing Europe

A Continent at a Turning Point

The global digital economy is evolving at an unprecedented pace, reshaping industries, societies, and geopolitical power structures. For Europe, this transformation presents both a profound challenge and a unique opportunity. The question is no longer whether Europe can compete in this new industrial revolution, but how it will assert itself—on its own terms, or as a follower of others.

Europe’s future depends on its ability to balance strategic technological agency with global cooperation, leveraging its unique strengths while addressing its vulnerabilities. The continent’s industrial base, regulatory leadership, and multilingual environment provide a solid foundation. Yet fragmentation, underinvestment, and dependency in many layers of the technological stack threaten to undermine its potential. To secure its place in the digital future, Europe must act decisively—and act now.

The Strengths: What Europe Brings to the Table

Much has been written about the enormous challenges Europe faces in the technological realm, particularly after missing out on the computing and mobile revolutions of the past decades. But Europe is not starting from scratch. The continent is home to world-class industrial players in semiconductors, industrial automation, and cloud infrastructure. Companies like ASML, Siemens, Bosch, and Mistral demonstrate Europe’s capacity for innovation and excellence. Initiatives such as the European Chips Act and EuroHPC are critical steps toward reducing dependencies and building sovereign capabilities in key technologies.

Europe’s future depends on its ability to balance strategic technological agency with global cooperation, leveraging its unique strengths while addressing its vulnerabilities.

Europe’s regulatory leadership is another major asset. The General Data Protection Regulation (GDPR), Digital Markets Act, and AI Act have set global benchmarks for privacy, transparency, and competition on a level playing field. Far from stifling innovation, these regulations can strengthen trust in European technologies—if implemented consistently and harmonized to reduce bureaucratic burdens. In times of geopolitical uncertainty, they can provide legal certainty to businesses and consumers who prioritize ethical and secure solutions. This regulatory framework should not be seen merely as a compliance burden; if done right, it can be a competitive advantage.
Europe’s commitment to open-source ecosystems further strengthens its position. From software solutions like Nextcloud and OpenDesk to AI innovations such as Kyutai and Black Forest Labs, Europe is fostering a culture of collaboration and transparency. Projects like the industrial data spaces CatenaX and the Sovereign Tech Agency highlight the continent’s dedication to interoperable, decentralized systems built on open-source foundations—an alternative to the closed ecosystems dominated by Big Tech. Perhaps most uniquely, Europe’s multilingual environment—often seen as a challenge—is increasingly recognized as a strategic asset. The need to bridge 24 official languages fosters innovation in cross-lingual technologies, particularly in machine translation, robotics, and human-machine interaction. This linguistic diversity and data wealth position Europe to lead in multimodal communication technologies, which are essential for global applications. A striking example is how Cologne-based DeepL regularly outcompetes much larger competitors like Google Translate. Another is the Polish voice-to-text engine that powers Amazon’s Alexa in millions of homes worldwide.

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The Challenges: Fragmentation and Dependency

Despite these strengths, Europe faces significant obstacles. The continent lags behind the U.S. and China in research and development (R&D) spending, particularly in software and internet technologies. While the EU accounts for just 7% of global R&D in these fields, the U.S. and China dominate with 71% and 15%, respectively. This innovation gap is exacerbated by fragmented markets, underfunded startups, and a lack of coordination among EU member states, all of which hinder Europe’s ability to scale and commercialize breakthrough technologies.

Europe’s dependency on digital infrastructure produced outside the continent is another critical vulnerability. Over 80% of the continent’s digital infrastructure is imported, leaving it exposed to supply chain disruptions, geopolitical pressures, and unprecedented conflicts of interest between the U.S. administration and the handful of individuals controlling Big Tech. The inability to produce competitive semiconductors that can rival Nvidia’s and Google’s Tensor Processing Units (TPUs) is a stark reminder of the challenges Europe faces in building domestic capacity in critical sectors. Similarly, reliance on U.S. cloud providers and Chinese hardware raises concerns about data sovereignty and regulatory compliance, especially as global tensions over technology and trade continue to escalate. Europe cannot regulate its way out of this dilemma—it must build innovative solutions.

Finally, Europe has struggled with a brain drain, as many of its top researchers and entrepreneurs relocate to the U.S. or China in search of better funding and scaling opportunities. The lack of a unified European tech ecosystem, compounded by bureaucratic hurdles and inconsistent national policies, further weakens the continent’s ability to retain and attract talent.

The Geoeconomic Imperative:
Why Technological Resilience and Sovereignty Matter

Europe’s reliance on foreign technologies is not just an economic issue—it is a geopolitical vulnerability. Recent disruptions, such as semiconductor shortages during the COVID-19 pandemic and U.S.-China trade tensions, have exposed the risks of dependency. When critical technologies are controlled by external powers, Europe’s ability to compete, innovate, and govern is compromised. This is particularly evident in the global AI confrontation between autocratic and democratic systems. Given the dominance of Big Tech platforms and a splintered media landscape in 2025, we must ask: What are the concrete implications for our citizens? “Democracy dies in the dark,” and we cannot afford to let others control the light switch.

Yet the goal cannot be isolation. Europe’s path to strategic technological resilience and sovereignty must be balanced with global cooperation, ensuring the continent remains open to innovation while protecting its interests. By investing in trusted infrastructure, open-source ecosystems, and mission driven innovation, Europe can reduce vulnerabilities, create high-skilled jobs, and set global standards for ethical and inclusive technology—using trust as a key asset in uncertain times.

Europe’s path to strategic technological resilience and sovereignty must be balanced with global cooperation, ensuring the continent remains open to innovation while protecting its interests.

The Path Forward: A Unified Vision for Digital Sovereignty

The European Summit on Digital Sovereignty, organized by the Franco-German tandem in November 2025, sent a strong signal that the urgency to act has been understood by the highest levels of political decision-makers. Now, the question is how to move forward in a unified yet agile manner. The EuroStack initiative represents one of the bolder steps framing the path forward. By integrating semiconductors, cloud infrastructure, IoT, and AI into a common digital framework, this industrial policy aims to reduce dependencies, foster innovation, and create scalable solutions for Europe’s citizens and industries. It also serves as a “mental model” to simplify the complexity of the technological ecosystem, making it more understandable across the silos and institutions of European decision-making.

This is a new approach, suggesting that a mission-driven industrial policy is needed to succeed with speed. Rather than remaining reactive, Europe must adopt a proactive, phased, and mission-driven strategy:

1. Stabilize and Align (2025–2027): Harmonize industrial policies, leverage existing strengths (e.g., ASML in semiconductors, Siemens in industrial automation), and invest in critical infrastructure.

2. Scale and Innovate (2027–2030): Launch high-impact projects, accelerate R&D in breakthrough technologies, and strengthen public-private partnerships.

3. Lead and Export (2030–2035): Position Europe as a global leader in ethical technology, export its regulatory model, and foster a unified tech ecosystem.

By investing in cross-lingual AI models and localized solutions, Europe can develop systems that outperform monolingual models, unlocking new applications in robotics, healthcare, and smart manufacturing. This will not only strengthen Europe’s industrial base but also enhance its global competitiveness.

Leveraging Multilingualism for Innovation

Against this backdrop, Europe’s multilingual environment presents a unique opportunity to lead in multimodal communication technologies. By investing in cross-lingual AI models and localized solutions, Europe can develop systems that outperform monolingual models, unlocking new applications in robotics, healthcare, and smart manufacturing. This will not only strengthen Europe’s industrial base but also enhance its global competitiveness.

Europe’s digital future will not be secured by outspending the U.S. or China. Instead, its strength lies in combining industrial excellence, regulatory leadership, and ethical innovation. By adopting a mission driven industrial policy, Europe has the chance to compete on its own terms—by investing in breakthrough technologies, building sovereign infrastructure, and leveraging its multilingual advantage. This new industrial revolution is not about copying the innovation paradigm of Silicon Valley. Rather than being “first to market” or “breaking things,” Europe’s opportunity lies in being “first to be trusted.” This will require bold investments, unified governance, and a commitment to its values. If successful, Europe can emerge as a global leader in ethical, inclusive, and innovative technology—not as a follower, but as a pioneer that opens new, gigantic markets after a healthy shock from the outside. Let’s work on this together in the orchestra of European democratic friends and strategic partnerships worldwide.

Martin Hullin

Martin Hullin is Director of the Bertelsmann Stiftung’s Digitalization and the Common Good program, where he leads his team in developing innovative approaches that strengthen the common good nationally and internationally. He is co-founder of the Datasphere Initiative and has held leadership roles in global multistakeholder policy networks. With expertise in international digital and data policy, AI, and sustainability policy, Hullin’s work has been presented at the UN World Data Forum and COP conferences.