As support for tech investment and sovereignty grows, there is a reminder that long-heard calls for regulatory reforms have not yet been answered
Brussels embraces the debate on tech sovereignty and competitiveness in the EU
On 24 September 2024, a coalition of MEPs – including representatives from the European People's Party (EPP), Renew Europe, the Progressive Alliance of Socialists and Democrats (S&D) and the Greens – hosted an event on developing European digital independence and building the “Eurostack” of digital public infrastructure. The next day, the newly minted Connect Europe (formerly ETNO) and Politico followed up with a similar event on the role of connectivity in shaping the EU’s digital future. With the impending formation of the new Commission for 2024-2029, both events reflected a shift in European rhetoric around tech and telecoms regulation, prioritising the EU’s global economic standing and competitiveness, as well as highlighting the need for tech sovereignty, infrastructure investment and innovation. Though participants largely agreed on the state of the EU economy and the next steps of the EC in implementing the existing tech rulebook and continuing the debate on reforming telecoms regulation, each event pitched a different vision for what the goals of these interventions should be.
The Draghi Report was met with a (mostly) warm reception from politicians, policymakers and industry
Picking up on a major theme of the day, participants at the parliamentary event from across the political spectrum lauded the recommendations of the Draghi Report on tech investment priorities. Francesca Bria (Associate Professor, UCL) also praised the report’s recognition of the importance of industrial policy to developing a stronger digital economy and gave credit to the efforts of former Commissioner for Internal Market Thierry Breton. Meredith Whittaker (President, Signal Foundation) warned, however, that when public funding is put forward to support a digital industrial strategy as recommended by Draghi, policymakers need to understand whether European firms will ultimately use that funding to pay for services, such as cloud computing, from US- and Chinese-based hyperscalers. Draghi was namechecked again at the Connect Europe/Politico event, with Juan Montero Rodil (Chief Public Policy, Competition and Regulatory Officer, Telefónica) stating that the former Prime Minister of Italy had placed a spotlight on things that should have been obvious, suggesting that he had been trying to raise the same concerns with the EC for the past three years – and seemingly with limited success. Using a healthcare metaphor, Roberto Viola (Director General, DG CNECT) agreed that the report is a reasonable diagnosis of the problems at hand, stating it was now on both the EC and industry to provide the remedy, while watching out for potential side effects. Tsvetelina Penkova (MEP, S&D) also pointed to that shared responsibility in terms of investment, arguing that as the EU makes public funding available, it was also incumbent on the private sector to “step up”.
Optimism about the road ahead and common ground on necessary telecoms sector reforms
In the wake of the Draghi Report (plus the EC’s White Paper and the Letta Report), Viola felt it was time for Europe to “turn the page and look to the future”, adding that his department was looking forward to helping Henna Virkkunen (EVP-designate for Tech Sovereignty, Security and Democracy) implement her mission letter and that he considered it positive that digital issues feature so prominently at the executive level. Montero Rodil said that Telefónica stood ready to support the new Commission, warning that missing the 2030 Digital Decade targets would leave the EU lagging behind its peers in the “second or third division”. There was a flashpoint between Montero Rodil and host Mathieu Pollet (Technology Reporter, Politico) over whether low telecoms pricing was a good outcome for consumers, with Montero Rodil believing that it was actually a poor outcome in the long-term, particularly if it leads to low network quality. He also argued that market structures across the bloc were currently not being driven by market forces, but by excessive intervention and regulation. Penkova agreed that bureaucracy in the telecoms sector is “quite heavy” and that there could be advantages to consolidation, including greater investment and scale, but was equally mindful of the potential downsides, such as less choice for consumers and job cuts. Spectrum policy reform was an issue on which speakers found common ground, with Viola conceding that this was something the EC failed to deliver sufficiently on three occasions (i.e. during the periodic updates to the EU’s telecoms regulatory framework). He was confident, however, that there's a “concrete possibility we’ll land someone good” this time around, although Penkova urged Member States to implement policy changes in both a timely and coordinated fashion.
Parliamentarians imagine a third, “European” way to grow the digital economy
Throughout the event on European digital independence, participants emphasised that the EU does not need to replicate the US or Chinese models for the tech sector in order to compete globally. Axel Voss (MEP, EPP) proposed that the EU could chart its own path, linking technological innovation to core European, democratic values. Alexandra Geese (MEP, Greens) echoed this call, stating that the EU did not have to replicate the harmful concentrations of market power and violations of privacy that underpin the US and Chinese tech economies. Numerous panellists pointed to the examples of India and Brazil in developing their own approaches to growing the digital economy as proof that the EU could do the same. Thibaut Kleiner (Director for Policy, Strategy and Outreach, DG CNECT) suggested that the “European way” should start from recognising and capitalising on the bloc’s existing strengths in high performance and quantum computing, hardware manufacturing and open source software development. Hermann Hauser (Co-founder, ARM Holdings) also identified quantum computing as well as AI and synthetic biology as sectors yet to be dominated by foreign tech firms and within reach for the EU to “win”. Francesco Bonfiglio (CEO, Dynamo) completed this vision for the bloc by suggesting that there is no need, and perhaps no desire, to wait for national champions to emerge because the EU is best at bringing together the strengths of its many internal parts to form a confederated, not concentrated, superpower.
