Saturday

16th Nov 2019

Opinion

Europe's tech race - trying to keep pace with US and China

  • The EU is envious of tech innovators and disruptors, such as Facebook's Mark Zuckerberg, but is it equipped to be a world leader in AI - as Emmanuel Macron wants? (Photo: Matt Tempest)

Being a leading tech innovator is vital to secure global influence in the future. But can Europe catch up with the US and China?

Political leaders today are increasingly aware that being at the cutting edge of technological innovation will prove crucial for citizens to retain their sovereignty.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 year's of archives. 30-day free trial.

... or join as a group

Europe has struggled to come to terms with the dominance of American tech giants in particular, amid recurring scandals from tax avoidance to abuse of personal data on social media.

French President Emmanuel Macron recently affirmed that artificial intelligence, a topic traditionally receiving more attention from science fiction writers than heads of state, was also an area which would prove critical for Europe.

In an interview with Wired, Macron said his "goal is to recreate a European sovereignty in AI" and argued that "if you want to manage your own choice of society, your choice of civilisation, you have to be able to be an acting part of this AI revolution".

While artificial super-intelligence poses threats, frontrunner nations in the field will earn themselves a decisive technological edge, with their leadership in AI enabling further innovation.

The European Union has certainly not been a passive observer in this area, but has scored clear wins in recent years, providing some justification for the bloc's stated intention to help its citizens to 'shape globalisation.'

For years, the commission has pressured tech giants to pay their fair share of tax and reduce monopolistic practices, including inflicting record multi-billion euro fines.

Even though the European Parliament made it easy for Mark Zuckerberg to avoid answering tough questions in his recent testimony in Brussels, the bloc's relentless advocacy for data privacy may still have had an impact on Facebook's CEO.

Addressing hearings at the US Senate earlier on, Zuckerberg said that his company would make EU data protection and privacy rules their global standard.

Europe's upcoming challenges

In the long run, however, the EU's leverage over foreign tech giants is likely to wane along with its shrinking share of the global economy.

To remain relevant in tech, Europe will have to up its game in research and innovation.

Here too, the commission has not been passive but has made research and innovation a cornerstone of its strategy for economic growth and development.

The bloc has shifted funding from agricultural and regional development programs to innovation and high technology, such as the Horizon 2020 program, which is ploughing over €24bn euros into research, technology, infrastructure, and higher education.

And Europe faces significant challenges in its bid to up its tech track record, as shown by data from the Bertelsmann Stiftung's Sustainable Governance Indicators (SGI).

While Europe is a highly innovative region compared to most of the world, the continent significantly underperforms North America and East Asia.

The SGI grades developed nations' performance on research and innovation by considering factors such as the overall policy framework, R&D spending, patents, and number of researchers.

According to these metrics, EU countries on average score 5.2, compared to the U.S. with 7.4 and Japan with 7.6.

Europe suffers from low R&D spending and relatively few patent applications.

Typically for Europe, innovation policy is fragmented and uneven across the continent, with nations such as Germany and Sweden ranking among the world's leaders, and Bulgaria and Slovakia falling among the worst-performing developed nations.

Meanwhile, there are worrying signs that Europe is falling behind.

In the private sector, European tech companies lack the combination of dynamism and scale enjoyed by their US counterparts.

As a result, there simply is no European equivalent to all-purpose US tech giants such as Google, Facebook, Apple, or Amazon.

China, in contrast, with its enormous homogeneous market, protectionist policies, and native innovation, has developed alternatives such as the search engine Baidu and the messaging app Tencent, which surpassed Facebook in value last November, becoming worth a whopping $500bn.

Where next on AI?

There is not a single European company among the world's top 10 computer hardware companies although the continent has plenty of innovative startups and dynamic people working in tech.

In the past, European social media players, such as DailyMotion in France or Twenti in Spain, have been able to conquer a national market, but then tend to gradually collapse in the face a far larger American rival.

Innovative European products, meanwhile, such as Skype and Minecraft have been bought by Microsoft.

And in regard to AI, Macron has his work cut out. The fact is that AI is absolutely dominated by the US and China.

A report by CB Insights found that China made up 48 percent of global funding for AI startups while the U.S. accounted for 38 percent.

The US and China also dominate in the numbers of top supercomputers they control, with China having a decisive lead. Europe lags both in the area of venture capital, with $14.4bn invested in the sector in 2015 in the old continent, trailing $72.3bn in the US and $49.2bn in China.

The EU's innovation capacities will also be harmed by Brexit.

The United Kingdom is a top performer in tech and startups, and is a net contributor to the EU budget.

The UK has the highest investment in venture capital in Europe, over 50 percent more than Germany, being worth $4.8bn in 2015. The UK is also home to the biggest number of Europe's tech giants: Its companies worth more than $1bn add up to $49.9bn, putting it far ahead of Sweden, the next-best performer.

So European nations will have to make a major effort if they want to stay relevant in the technological race.

Some obstacles are relatively insuperable.

The EU market, unlike that of the US or China, is nationally fragmented for cultural and linguistic reasons as well as regulatory ones. The EU as a multinational body furthermore cannot be as reactive and decisive as a national government, let alone an authoritarian one such as China's.

Top marks for research in Europe

At the same time, the EU does have specific assets.

What the Union lacks in immediate reactivity, it gains in the consistency of long-term policy.

The bloc is for the first time in years enjoying a welcome spell of economic growth.

The eurozone has, on average, an astonishingly low deficit spending of less than one percent of GDP and with growth debt levels as a percentage of GDP are actually declining.

This is in marked contrast to the US and Japan, which have continued to resort to deficit spending to sustain growth, a strategy which is likely to be inflationary in the long run.

The silver lining to the eurozone's long economic crisis may also be the adoption of a growth model with greater macroeconomic discipline and, with any luck, less of a tendency towards boom and bust cycles than other advanced economies.

The SGI notes that many European nations are top performers in research and innovation, best practices which other EU countries can learn from. The economic windfall from the current growth could be used to make up the gap in R&D spending and EU funds can continue to be used to finance upward convergence.

The European authorities remain keenly aware of the bumpy road ahead.

The commission has been working to develop the digital single market, breaking down national regulatory barriers where possible. 24 EU nations recently signed a pact pledging to increase AI spending and this is no doubt an area where a great Franco-German research project could bear fruit, in the tradition of Airbus.

The commission has recently presented plans to increase spending for AI by 70 percent to €500m and to invest €2.1bn in venture capital.

Brexit's negative consequences for the EU's innovation capacities can be mitigated somewhat.

The EU has proved remarkably cohesive and strong-handed in its negotiations with London.

Both sides would benefit from making any changes to market access as predictable and clear as possible, to maintain cooperation in high technology and research projects, and generally to make each other's innovation systems as open and connected to each other as possible. With good will, no doubt such a deal can be secured in the interest of both British and European citizens.

In an age increasingly defined by technology, whether in culture, society, or economics, retaining a technological edge in innovation will be crucial to retaining European citizens' sovereignty and values.

This includes issues such as privacy, data protection, and social equity, all themes where Europe is a world leader in protecting citizens' rights. Europe has among the highest concentrations of human capital.

To exploit that potential, the region will have to increase and pool their efforts in innovation and tech if they are to catch up with the US and China.

Craig James Willy is a Brussels-based EU affairs writer. He has written political analysis for the Bertelsmann Stiftung and media analysis for the European Commission

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

Focus

Are EU data watchdogs staffed for GDPR?

The success of the new general data protection regulation (GDPR) will depend on whether data protection authorities enforce the new rules - which, in turn, will be at least partly determined by how many people they employ.

Column / Brussels Bytes

The EU cannot shape the future of AI with regulation

If the EU continues to over-regulate AI, its AI systems will fail to compete on a global scale and the technology's long-term future, for better or worse, will be shaped by the United States and China.

Has the time finally come for 'European champions'?

Since Emmanuel Macron took the French presidency in 2017, the concept of consolidating European industries to create continental 'champions', capable of competing on a global scale, has been revived.

News in Brief

  1. Catalan politicians extradition hearing postponed
  2. Germany: EU banking union deal possible in December
  3. EIB: no more funding of fossil-fuel projects
  4. UK defence chief: Russia could trigger World War III
  5. Hungary's Varhelyi will face more questions
  6. Police put former Berlusconi MEP Comi under house arrest
  7. MEPs criticise Poland for criminalising sex education
  8. UK will not name new commissioner before election

'A game of roulette' - life as a journalist now in Turkey

Turkey has more journalists behind bars than any other country in the world. The authorities seem to equate journalism with terrorism: everyone has the right to express themselves, but, in their eyes, legitimate journalism is a threat to security.

Stakeholders' Highlights

  1. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  2. Nordic Council of MinistersNordic Climate Action Weeks in December
  3. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  4. Nordic Council of MinistersBrussels welcomes Nordic culture
  5. UNESDAUNESDA appoints Nicholas Hodac as Director General
  6. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  7. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  8. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  9. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  10. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  11. Nordic Council of MinistersNo evidence that social media are harmful to young people
  12. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021

Latest News

  1. Key moments for new commission This WEEK
  2. EU threatens legal action against UK over commissioner
  3. Corruption in the Balkans: the elephant in the room
  4. Green MEPs unconvinced by Romanian commissioner
  5. EU states fell short on sharing refugees, say auditors
  6. Hungary's commissioner-to-be grilled over loyalty to Orban
  7. Widow's plea as EU diplomats debate Magnitsky Act
  8. Leftist MEPs call on EU to address crisis in Chile

Stakeholders' Highlights

  1. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic commitment to driving global gender equality
  2. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  3. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  4. Nordic Council of MinistersNordic talks on parental leave at the UN
  5. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  6. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  7. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  8. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  9. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  10. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  11. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  12. Nordic Council of MinistersNordic ministers take the lead in combatting climate change

Join EUobserver

Support quality EU news

Join us