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Europe – Whatever It Takes
Europe’s contribution to modern science and technology is undeniable. Alan Turing, one of the pioneers of artificial intelligence, laid the foundation for machine learning and computational theory with his early work on breaking the Enigma code during World War II. The Enigma-breaking efforts, led by Turing at Bletchley Park, not only changed the course of the war but also sparked the early development of modern computing.
Beyond Turing, Europe has produced a host of intellectual titans whose work defined entire fields. Albert Einstein revolutionized physics with his theories of relativity, while Marie Curie’s research on radioactivity advanced both science and medicine. Institutions such as ETH Zurich, Cambridge University, Oxford, and the Technical University of Munich have been global leaders in nurturing top-tier researchers and driving technological progress. Yet despite its rich intellectual heritage, it is losing ground in the global race for dominance in AI and advanced technology. The consequences of this shift extend far beyond economics—they pose existential risks to Europe’s security and geopolitical standing. Understanding this gap requires not only reflecting on Europe’s proud history but also analyzing its current challenges and the structural changes needed to reclaim its place in the global technological order. In recent decades, the region has faced challenges in maintaining its competitive edge, particularly in fields like artificial intelligence and advanced technology. This shift has significant implications for Europe’s economic autonomy, national security, and geopolitical influence.
Europe, historically a leader in science and technological innovation, now faces a critical inflection point of either becoming a regulatory speed bump for the world, or taking immediate steps to regain its influence across technology innovation and economic output. To understand what is actually at stake, look no further than to US Tech CEOs who in recent weeks emphasized the importance of what is actually at stake, and the criticality of staying at the forefront of AI innovation, and the consequences of coming in second place. In recent weeks, Mario Draghi sounded the alarm once again detailing what is needed – “whatever it takes“.
Economic Dependence and Innovation Gap
With the rapid modernization of technology across all sectors, including national security, Europe risks becoming predominantly a consumer of technologies developed in the United States and China. This dependency could lead to:
- Economic Output Decline: Europe will experience reduced economic growth and a diminished share of global intellectual property.
- Job Market Challenges: A lack of innovation can result in fewer high-skilled job opportunities within the region, potentially leading to economic stagnation and an outsourcing of talent to the United States. Nearly half of the US Fortune 500 companies were either founded by immigrants, or the children of immigrants.
National Security Concerns
The state of war is changing globally, and it’s not only imperative but required for a sovereign state to bolster their technology arsenal for the sake of national security. Europe’s lag in AI and advanced technology development could result in:
- Strategic Vulnerabilities: Dependence on non-European technology for critical infrastructure may expose Europe to security risks, including cyber threats and espionage. We have seen this take shape in the current war between Ukraine and Russia, and other local conflicts which are deterred by NATO.
- Limited Defense Capabilities: Without cutting-edge technology, Europe’s ability to develop advanced defense systems may be compromised, affecting its strategic autonomy.
Geopolitical Influence
Technology is a key determinant of geopolitical power. Europe’s current trajectory might lead to:
- Diminished Global Influence: As other regions advance technologically, Europe’s relative influence in global affairs could wane.
- Challenges in Policy Leadership: A lack of technological leadership may hinder Europe’s ability to shape international norms and policies related to technology and innovation.
A Widening Gap in AI and Technology Leadership
Today, Europe finds itself significantly behind global leaders such as the United States and China in AI and advanced technology. A stark example of this is reflected in the list of the top 100 technology companies by market capitalization. As of recent years, fewer than 10 of these companies are based in Europe. In stark contrast, the U.S. is home to tech giants like Apple, NVDIA, Google, Meta, Tesla, OpenAI, and Amazon, while China boasts companies like Alibaba, Tencent, and Huawei. Europe’s most prominent names—SAP and ASML—are highly specialized and represent a fraction of the global tech ecosystem’s value. The lack of European presence among global technology leaders illustrates the region’s failure to scale companies capable of competing on the global stage.
This is not just a matter of capital markets or entrepreneurship—it is also a failure to protect and cultivate local intellectual property. Two of Europe’s most promising AI and tech companies, DeepMind and ARM, were sold to foreign buyers: Google acquired DeepMind, while SoftBank bought ARM. Although SoftBank’s attempt to sell ARM to NVIDIA fell through, the fact that ARM, one of Europe’s most strategically important technology companies, is no longer European-owned highlights the region’s vulnerability in retaining homegrown talent and intellectual property. ARM’s 2023 initial public offering (IPO) was a significant event, but it underscores Europe’s inability to maintain control over key assets in the global technology race.
The Economic and Security Consequences
The economic implications of Europe’s declining role in technology are profound. The global economy is increasingly driven by advancements in AI, software, and next-generation hardware, all areas where Europe is lagging. As the digital economy grows, Europe risks being left behind, with a shrinking share of global IP, diminishing high-tech job creation, and an over-reliance on foreign technology. This vacuum also pushes large amounts of capital into regions like the United States which is the leader in foreign and direct investment, creating valuation bubbles and increased competition across private markets.
Security concerns are equally significant. AI is becoming a central component in national defense strategies, from cybersecurity to autonomous systems. Without homegrown AI capabilities, Europe may find itself dependent on external powers, leaving its digital infrastructure vulnerable to attack or coercion. This reliance on foreign technology also means that Europe has limited say in shaping global standards, policies, and governance in AI, giving China and the U.S. greater control over the future of these technologies.
Strategic Initiatives for Rejuvenation
1. Enhancing Research and Development (R&D) Investment: Increasing funding for R&D in AI and advanced technologies can stimulate innovation and bridge the gap with global leaders.
2. Fostering Public-Private Partnerships: Collaborations between government, industry, and academia can drive technological advancements and support startups. In the US, the Johns Hopkins University Applied Physics Laboratory (JH APL) in Maryland was established in 1942 during World War II. It was created to develop and enhance technologies to support the war effort, particularly in improving the effectiveness of naval weapons systems. Initially, APL played a key role in the development of the proximity fuze, a critical innovation that drastically improved the accuracy of anti-aircraft artillery. Over time, the lab’s mission expanded to include broader research and development in national security, space exploration, and health sciences, serving as a leading institution for applied research and technological solutions in defense and beyond.
3. Implementing Protective Measures for Intellectual Property: Establishing policies to safeguard European IP can prevent critical technologies from being acquired by non-European entities.
4. Promoting a Culture of Innovation and robust Capital Markets: Encouraging risk-taking and entrepreneurship can lead to the development of new technologies and business models, as well as exit opportunities which further create a cycle of investment.
Mario Draghi’s Vision for Reclaiming Europe’s Future
Former Italian Prime Minister Mario Draghi has been among the most vocal advocates for Europe’s technological resurgence. In a recent speech, Draghi highlighted the region’s untapped potential and laid out a plan to restore Europe’s competitive edge in AI and advanced technology. His vision is multifaceted, focusing on three key pillars: deepening capital markets, fostering a culture of innovation, and creating a more proactive role for government.
1. Capital Markets: Draghi argues that Europe’s fragmented and risk-averse capital markets are a significant barrier to scaling tech companies. Unlike in the U.S., where venture capital is abundant and tech firms can easily access growth capital, European startups face a patchwork of funding sources and regulatory hurdles. Draghi calls for the creation of pan-European capital markets that can fuel high-growth tech firms and help them scale globally.
2. Fostering Innovation: Draghi also emphasizes the need to create a culture of entrepreneurship, risk-taking, and innovation. While Europe has world-class universities and researchers, it often lacks the entrepreneurial mindset seen in Silicon Valley. Draghi suggests that European educational institutions should prioritize tech-focused programs that encourage both research and commercialization, helping students transition seamlessly from academia to startup founders.
3. Proactive Government: Finally, Draghi believes European governments must take a more proactive role in supporting tech innovation, particularly through public-private partnerships. This could involve increased government funding for AI research, tax incentives for tech companies, and streamlined regulatory processes that encourage innovation rather than stifle it. Governments should also be prepared to protect critical IP from foreign acquisitions, ensuring that European tech firms can remain independent and grow on home soil.
The Geopolitical Stakes
Europe’s future role in AI and advanced technology is about more than economic growth—it is about global power dynamics. The dominance of AI and advanced computing will shape the geopolitical landscape for decades to come, influencing not just economic power but also military strength and diplomatic leverage. If Europe fails to close the technology gap, it risks becoming a geopolitical afterthought, with diminished influence on the global stage. The choices Europe makes today—whether to invest in its own tech ecosystem or continue ceding ground—will have profound implications for its future.
Europe’s missed opportunity in AI and advanced technology represents a pivotal challenge for the region. While the continent’s historical contributions to science and technology are immense, today’s reality is in stark contrast. This is a defining moment, and an opportunity for Europe to mobilize its financial resources, cultivate its talent, and protect its intellectual property. But if it fails, the consequences will be far-reaching—economic stagnation, security vulnerabilities, and geopolitical irrelevance.
Every story has a silver lining, and therefor despite Europe’s challenges in maintaining a competitive edge in technology and innovation, the region remains a global leader in areas that define the human experience—its rich cultural heritage, renowned fashion empires, and centuries-old traditions in art, food, and civility. While U.S. and Chinese tech giants dominate the global market, European brands like LVMH, Kering, Chanel, Ferrari, Rolls-Royce, stand as testaments to Europe’s resilience in luxury goods and craftsmanship. These empires, deeply rooted in Europe’s culture, not only remain robust but continue to thrive among the world’s most valuable companies. Europe may be lagging in technological innovation, but its global influence in the finer aspects of life—culture, cuisine, and the arts—remains unparalleled. In many ways, Europe’s legacy is as much about fostering humanistic values as it is about innovation. In our race for innovation, the West runs the risk of forgetting our own short lived history, opting instead for AI models which may rewrite it – hallucinations included.