European Tech Coalition Urges Digital Sovereignty with 'Radical Action'

A Call for Digital Sovereignty in Europe

A substantial alliance encompassing a wide spectrum of Europe’s technology sector is urging European Union officials to implement “radical action.” This action aims to diminish the dependence on digital infrastructure and services owned by foreign entities, thereby strengthening the bloc’s economic standing, its ability to withstand challenges, and its overall security amidst escalating geopolitical tensions.

Letter to EU Leaders

Over 80 signatories, representing approximately 100 organizations, have jointly authored an open letter addressed to European Commission President Ursula von der Leyen and the EU’s digital policy lead, Henna Virkkunen. They advocate for a reevaluation of current support initiatives.

The focus, they argue, should be on promoting the adoption of domestically developed alternatives possessing strong commercial viability. This includes advancements in applications, platforms, artificial intelligence models, semiconductors, computing power, data storage, and network connectivity.

A Quasi-War Footing for Tech

Companies involved in cloud computing, telecommunications, and defense, alongside numerous regional business and startup groups, have endorsed the letter. Sent to the Commission on Sunday and reviewed by TechCrunch, it calls for a shift in the EU’s tech strategy towards a “sovereign digital infrastructure” approach.

The proposal centers on reducing reliance on foreign Big Tech companies by proactively encouraging the development of a “Euro stack.” This concept isn’t novel; a detailed strategy outlining the EuroStack was published in January, authored by economist Cristina Caffarra and others.

Geopolitical Considerations

Recent discussions at industry conferences have highlighted the potential for European enterprises to capitalize on the current geopolitical climate. The aim is to advocate for a digital industrial strategy that prioritizes local innovation.

This push for European tech supremacy is supported by prominent companies such as Airbus, Element, OVHCloud, Murena, Nextcloud, and Proton. It follows the unsettling events at the Munich Security Conference, where U.S. Vice President JD Vance delivered a forceful message.

Concerns Over U.S. Control

Vance’s remarks left delegates with little doubt that the post-war international order is unstable and that the U.S. approach under President Donald Trump is unpredictable. From a European viewpoint, key tech infrastructure controlled by U.S. firms appears less secure.

A U.S. presidential executive order could potentially disrupt service provision or sever supply chains with minimal notice. As Wolfgang Oels, COO of Ecosia, a Berlin-based search engine, explains to TechCrunch, “Imagine Europe without internet search, email, or office software. It would mean the complete breakdown of our society.”

Ukraine as a Cautionary Tale

Oels points to the situation in Ukraine as a warning. “Trump switched off access to vital infrastructures because Ukraine was not ready to cede its land and hand over its minerals.” He emphasizes the need for European sovereignty in critical infrastructure, encompassing not only energy and healthcare but also the digital realm.

Criticism of European Regulations

Vance also criticized European legislation at the AI Action summit, characterizing it as an impediment to innovation and U.S. technological dominance. His message conveyed a clear ultimatum: comply with U.S. demands or risk being left behind in the AI-driven future.

Responding to the Draghi Report

This industry letter is not solely a reaction to external pressures. It builds upon, and references, the 2024 Draghi report on EU competitiveness. This report has sparked considerable debate in European capitals regarding strategies to address slowing regional growth, but has yielded limited concrete action.

A Prescription for Action

The coalition’s communication presents an initial proposal for action from the European tech industry, coupled with a warning about the consequences of inaction. Without swift measures to stimulate demand for European technologies, there is a risk of U.S. hyperscalers completely dominating critical digital infrastructure, such as cloud computing.

The Urgency of Change

EuroStack proponents predict that “Europe will lose out on digital innovation and productivity growth without sweeping and urgent change.” They warn that, at the current rate, Europe’s reliance on non-European technologies will become almost total within three years.

What Specific Actions are Proposed?

The core of the coalition’s advocacy centers on urging the EU to take decisive steps to foster a more independent and resilient digital ecosystem.

Prioritizing European Technology

A recent proposal advocates for the European Union to stimulate demand and encourage investment within the tech sector. This would be achieved through the implementation of public procurement regulations. These regulations would stipulate that a certain percentage of digital needs for public entities must be fulfilled by local providers – essentially a “Buy European” policy.

The authors of the proposal emphasize that investment from industry will follow when sufficient demand is guaranteed. They suggest that focusing on areas where Europe currently possesses capabilities is crucial. This strategic prioritization will rapidly direct resources towards European suppliers, fostering a positive cycle of value creation and market growth.

It is clarified that the intention is not to exclude companies based outside of Europe. Rather, the goal is to establish a competitive environment where European suppliers can effectively contend for contracts and justify further investment.

Procurement requirements are described as a straightforward and logical step forward.

“A directive for the public sector to prioritize European products, or predominantly European ones, is essential,” one expert states. “Why is this problematic? The United States actively supports American businesses, and China prioritizes its own companies. Yet, Europe often adopts a completely open approach to procurement.”

The core argument centers on the changing global landscape. With a shift towards “America First” policies, and a diminished expectation of support from the United States, the EU’s commitment to neutrality in investment appears increasingly outdated.

While “Buy European” mandates could be imposed on public sector purchasers, alternative strategies could be employed for private sector entities. A “Euro Stack” initiative might incorporate incentives, such as vouchers or financial assistance, to encourage the adoption of domestically produced solutions. “Subsidies may be necessary, but the required amounts would not be excessively large,” it is proposed.

Pooling and Federating Resources

The letter proposes that the EU should actively foster a “pooling and federating” strategy among European technologists. This involves the creation of unified standards to expedite the growth of locally developed digital infrastructure.

Collaborative efforts and aligned strategies are intended to enhance the competitive standing of European providers. This is particularly relevant when facing competition from U.S. hyperscalers in sectors like cloud computing.

Key Recommendations for Infrastructure Development

The suggested approach includes rapidly assessing available resources, championing open source solutions, and ensuring both technical and commercial interoperability. Aggregating existing, high-quality assets is also crucial.

Supporting seamless integration through platforms and minimizing compliance hurdles – while upholding localization and security – are highlighted as essential. Priority should be given to projects addressing fundamental infrastructural needs, such as hardware independence and sovereign cloud platforms.

Past Initiatives and Challenges

Previous attempts at achieving digital sovereignty, such as the Gaia-X initiative launched in 2020, faced setbacks. The original goal of creating a European cloud to rival U.S. and Chinese providers was compromised.

According to Caffarra, the involvement of U.S. hyperscalers like AWS, Microsoft, and Google ultimately undermined the Gaia-X project from within.

The letter also addresses the drawbacks of welcoming foreign hyperscalers. Their expansionist strategies often prioritize customer lock-in and maximizing profits.

The Importance of Openness and Data Sovereignty

The signatories argue that “openness” – encompassing open science, standards, and data – should be a cornerstone of Europe’s digital sovereignty strategy. This is in contrast to the proprietary technologies employed by non-European corporations.

They are advocating for the EU to support the development of standardized requirements. These would allow public and private cloud users to choose “sovereign cloud services” for sensitive data storage.

A certification scheme is proposed, framed as a security measure to protect European data from potential risks posed by extraterritorial laws originating outside the EU.

Refocusing EU Digital Strategy and Funding

The letter urges a review of the existing EU Digital Decade strategy. Existing plans should be adjusted to ensure funding is directed towards “tangible, market relevant, result-oriented projects.”

Project assessment should be based on business outcomes, utilizing key performance indicators and critical success factors. This will help ensure EU funds are allocated to services with strong potential for widespread adoption.

Concentrating EU support on domestic tech infrastructure with the greatest scalability potential is central to this proposed plan.

Sovereign Infrastructure Fund

Regarding financial backing, the communication advocates for the European Union to establish a “Sovereign Infrastructure Fund.” This fund would be designed to bolster public investments within European digital infrastructure.

Specifically, the focus should be on areas demanding significant capital expenditure within the technology value chain, including sectors like chip manufacturing and quantum computing.

Caffarra posits that the fund doesn't necessitate substantial financial resources. She suggests that even modest allocations, when strategically deployed, could yield considerable benefits.

An example of such strategic targeting would be the sustained support of open source infrastructure.

“Europe possesses a remarkably large and highly skilled open source community,” she emphasizes.

Furthermore, she refutes claims of exorbitant costs associated with the overall implementation of EuroStack. She contrasts this with the figure of €5 trillion or more, proposed by the U.S.-based Chamber of Progress – an organization representing numerous American technology corporations.

Caffarra clarifies that the initiative isn’t intended as a complete overhaul of existing systems. Instead, it represents an appeal for Europe to align its efforts and collaboratively develop a cohesive digital industrial strategy.

The primary objective is to enhance domestic capabilities by stimulating demand for foundational technologies already within the reach of European companies.

By securing future demand, the EuroStack proposal aims to cultivate further growth and innovation within the European technology sector.

This, in turn, would contribute to the bloc’s progress towards greater independence in crucial digital infrastructure.

However, Caffarra acknowledges that additional investment is required in other areas. She highlights the trend of European entrepreneurs seeking venture capital funding in the United States.

“The creation of a sovereign fund dedicated to investing in European startups is a necessity,” she states, while reiterating that the required investment can be relatively contained.

This could be achieved by concentrating on early-stage ventures, rather than broadly distributing funds to established businesses.

• Key Focus: Supporting digital infrastructure development.
• Target Areas: Chips and quantum computing.
• Investment Strategy: Strategic allocation of modest funds.

EuroStack's Goal: To foster local tech growth and increase digital autonomy.

Re-evaluating Digital Leadership

Despite discussions surrounding digital sovereignty during Ursula von der Leyen’s presidency, the EuroStack coalition believes that current EU initiatives in this area are misdirected and ultimately ineffective.

Their analysis indicates that excessive funding is allocated to academic research and experimental development, rather than to practical commercial ventures. With appropriate scaling support, these commercial efforts could genuinely foster strategic autonomy in digital infrastructure.

Therefore, the coalition’s letter urges the EU to embrace an industry-driven approach to reshape its digital strategy, moving away from traditional top-down policymaking.

Caffarra’s critique of the EU’s digital sovereignty record is particularly strong; she labels the existing strategy as “useless.” She contends that initiatives like the EU’s “AI factories,” intended to build an AI ecosystem, are overly dependent on academic groups and unlikely to yield commercially viable results.

The letter, while more diplomatic in tone, essentially calls for EU lawmakers to relinquish direct control over critical decisions concerning Europe’s declining digital infrastructure. Instead, it advocates leveraging their “convening powers” to mobilize industry for coordinated strategy development.

As the coalition states, this would actively contribute to a European digital sovereign effort.

They propose that “To bolster Europe during this critical juncture for security and strategic autonomy, the Commission must promptly establish and convene industry working groups to translate its tech sovereignty aspirations into tangible actions.”

TechCrunch contacted the European Commission for comment on the EuroStack proposal but had not received a response as of this writing.

Subsequently, during a press briefing on Monday, the EU addressed a journalist’s inquiry regarding the letter. A spokesperson, Lea Zuber, indicated it was premature to determine whether digital infrastructure would be included in a strategic review of the bloc’s public procurement regulations.

Zuber explained to TechCrunch that the forthcoming review will prioritize “sustainability, resilience, and European preference criteria in EU public procurement for strategic sectors.” However, she emphasized that “the specific definition of these strategic sectors remains to be determined.”

Industry Perspectives

A comprehensive list of all signatories is provided at the letter’s conclusion. However, Caffarra characterizes the combined support as representing “virtually all of Europe’s cloud providers, telecommunications companies, software developers, open source initiatives, and major industrial entities such as Airbus and Dassault Systèmes.”

Further additions to the list of supporting companies are anticipated in the near future, particularly from within Europe’s burgeoning AI ecosystem. She also suggests that certain organizations, despite their inclination to support the initiative, refrained from signing due to concerns regarding potential repercussions from large technology corporations, given their existing customer relationships.

Beyond technology firms, a diverse array of regional business organizations have endorsed the letter. These include prominent groups like Connect Europe, representing the telecommunications sector, the OSBA (Open Source Business Alliance), the European Digital SME Alliance, the European Startup Network, and France Digitale, among others.

Regarding startups, Caffarra acknowledges that for some European founders and their investors, acquisition by U.S.-based Big Tech companies represents a desired outcome. This could potentially create a conflict when considering a strategy focused on reducing reliance on American technology. One startup association’s openness about pursuing acquisition by larger firms was noted, though their identity will remain confidential.

“This represents one potential path forward,” she states, referring to the Big Tech acquisition strategy. “I am not attempting to preclude this option; rather, I am advocating for the development of viable European alternatives.”

A Call for European Digital Independence

Johan Christenson, founder of Cleura and now head of technology at Iver, proposes a significant initiative for Europe, asserting the necessity of a new, large-scale project akin to Airbus to bolster the continent’s digital capabilities.

He suggests that Europe should adopt a different approach, moving beyond simply observing protectionist trends elsewhere. This could involve mandating the use of open-source software and ensuring interoperability between communication tools, like chat and video conferencing systems.

Christenson also emphasizes the importance of public procurement policies, advocating for requirements that favor European technology providers.

The Need for a Paradigm Shift

Andy Yen, founder of Proton, echoes this sentiment, stating that a fundamental change in mindset is crucial for Europe’s technological advancement.

Historically, prioritizing a global perspective and “playing fair” has disadvantaged Europe, while the U.S. and China have consistently prioritized their own interests. Yen argues that Europe must now adopt a similar “Europe First” strategy.

He clarifies that Europe’s technological shortcomings aren’t due to a lack of talent, but rather a lack of demand, stemming from decades of choosing cost-effective solutions from the U.S. and China over investing in European innovation.

Yen proposes that incentivizing European public sector procurement of European technology is the most effective way to address this demand issue and stimulate growth within the European tech sector.

He believes that Europe needs to actively favor its own technology, rather than simply striving for a level playing field.

Evaluating the Digital Markets Act

Regarding the Digital Markets Act (DMA), Yen expresses skepticism about its effectiveness as a standalone solution.

Despite the DMA being in effect since March 2024, he notes no substantial changes in market share for Big Tech companies in Europe. He contends that while fines imposed by the DMA might slightly impact American GDP, they won’t significantly contribute to European GDP growth.

Yen criticizes the European Commission for focusing on the “Europe of the past” instead of proactively shaping the “Europe of the future.”

He urges the Commission to heed the long-standing advice of European entrepreneurs regarding the necessary steps for digital sovereignty.

Data Security, Privacy, and Economic Risks

Frank Karlitschek, CEO of Nextcloud, highlights a range of data security and privacy concerns, alongside the potential for economic “blackmail” from a U.S. administration prioritizing its own interests.

He points out the potential for U.S. cloud services to be used as leverage for political or economic gains, emphasizing the need for alternative options.

Karlitschek suggests that mandating a certain percentage (50-80%) of open-source components in “critical infrastructure” within a short timeframe would stimulate innovation and benefit European tech firms.

He advocates for increased government contracts awarded to European open-source companies, aligning with recent initiatives in Germany, and asserts that digital sovereignty is inextricably linked to open-source software.

Collaboration and Standardization

Karlitschek also praises efforts to establish standards that facilitate seamless workload migration between cloud providers.

He cites the open cloud industry standard API specification SECA as an example, enabling European service providers to collectively offer greater scalability and reliability.

He encourages smaller vendors to collaborate and create joint offerings, providing the public sector and large businesses with increased assurance of continuity.

Furthermore, Karlitschek calls for the EU to rigorously enforce its existing digital regulations, including those related to privacy and antitrust, to hold Big Tech accountable.

Focusing on Infrastructure

However, Caffarra argues that these adjustments are insufficient, advocating for a more radical shift in approach.

She emphasizes that the DMA focuses on the “top” of the technology stack – search, social networks, and e-commerce – while neglecting the underlying infrastructure.

Caffarra warns that the vast majority of tech infrastructure currently resides outside European control, necessitating a new survival strategy rather than incremental adjustments.

She stresses the importance of addressing compute, cloud, connectivity, and chips – the foundational elements of the digital landscape.