Fundamental issue of technological sovereignty for Europe amid tensions between the US and China

LONDON – The European Union is investing billions of euros in what it believes to be fundamental and essential technologies as part of an effort to increase its technological sovereignty and reduce its dependence on the United States and China.

The Fraunhofer Institute, a German state-backed research agency, defines technological sovereignty as the ability of a state “to provide the technologies it considers critical for its well-being, competitiveness and ability to act, and to be able to develop or obtain them from other economic areas without unilateral structural dependence. “

Europe today relies heavily on technologies that come from beyond its borders, but the continent’s leaders want to change that.

“Strengthening Europe’s digital sovereignty is a key component of our digital strategy,” a spokesman for the European Commission, the executive arm of the European Union, told CNBC. “Europe can play a leading role on the world stage when it comes to technology.”

Today, however, Europe is lagging behind when it comes to crucial technological infrastructure, like semiconductors and super-fast telecommunications networks.

Companies like Cisco in the US and Huawei in China have built the pipeline that supports the internet for more than 700 million people in Europe. The chips come largely from manufacturers like Nvidia, Qualcomm and Intel in the United States, Foxconn in China, Samsung in South Korea or TSMC in Taiwan, which China sees as a breakaway province. Then there are the US and Chinese internet platforms – think of Google, Facebook, Instagram and TikTok – which have hundreds of millions of European users, who share their personal data with companies on a phenomenal scale.

“Nations are concerned that technology is allowing foreign powers to dominate them in every way,” said Abishur Prakash, a geopolitics expert at the Center for Innovation of the Future, which is a Toronto-based consulting firm, to CNBC by email. “Because of this, governments are looking at technology through a new lens.”

The continuing geopolitical tensions between the US and China have not gone unnoticed by European leaders.

In recent years, the United States has fought a battle against Huawei, one of China’s most valuable technology companies, urging other countries around the world to boycott it. The United States has accused the Shenzhen-based company of building backdoors in its equipment that can be exploited by the Chinese Communist Party for espionage purposes. Huawei has repeatedly denied the allegations.

Under the Trump administration, Washington blacklisted dozens of other Chinese technology companies last year, including drone maker DJI. Meanwhile, Beijing has blocked American platforms like Google, Facebook and Twitter for years.

“In the face of growing tensions between the United States and China, Europe will not be a mere spectator, much less a battleground,” said Thierry Breton, European Union’s internal market commissioner, in a speech last July. “It is time to take our destiny into our own hands. It also means identifying and investing in digital technologies that will sustain our sovereignty and our industrial future ”.

Technology analyst Benedict Evans, a former partner at risk firm Andreessen Horrowitz, told CNBC that technological sovereignty over China and the West is interesting and important. “Your supply chain is in a hostile country and both sides are concerned about that,” he said. “The differences between the US, the UK and the EU seem to me to be nothing more than populist nods.”

Since Breton’s speech, Europe has announced plans to invest billions in technologies ranging from semiconductor chips to new telecommunications infrastructures, with the vision that these technologies can help facilitate the development of others, such as artificial intelligence and autonomous cars. .

“Europe’s digital sovereignty rests on three pillars: computing power, control of Europeans over their data and secure connectivity,” said a spokesman for the European Commission. “To this end, Europe’s ability to design and produce the world’s most powerful processors must be increased, innovative European clouds that guarantee data security need to be created, and governments, businesses and citizens need access to broadband networks. safe and high speed. “

The chips are used to power cars, phones, high-performance computers, defense systems and AI, but Europe accounts for less than 10% of global production, although it is 6% higher than five years ago. The European Commission wants to increase that number to 20% and is considering investing 20-30 billion euros (US $ 24-36 billion) to make this happen.

When it comes to connectivity, the European Commission wants 100% of the European population to have download speeds of 1 gigabit per second; average speeds are currently well below 100 megabits per second. He is starting to prepare for 6G and plans to use satellites to broadcast the Internet across the continent.

The Briton and European Commission Vice President Margrethe Vestager included the targets in a new plan “Digital Compass 2030” on Tuesday, which aims to translate the EU’s digital ambitions for 2030 into “concrete terms”.

They also said that they want Europe to build its first quantum computer – a machine that employs quantum phenomena like superposition and entanglement to perform computing tasks – in the next five years.

“As a continent, Europe must ensure that its citizens and businesses have access to a choice of cutting-edge technologies that will make their lives better, safer and even more environmentally friendly – as long as they also have the skills to use them”, Breton said in a statement.

“In the post-pandemic world, this is how we are going to shape a resilient and digitally sovereign Europe together,” he added. “This is Europe’s Digital Decade.”

The European Commission insists that technological sovereignty is not about “isolating” Europe, but about defending its strategic interests and affirming its values.

“It’s about protecting our companies from predatory and sometimes politically motivated foreign acquisitions,” said Breton. “And it is about developing the right technological projects that can lead to European alternatives in essential strategic technologies.”

Europe has already lost some of its biggest and most important technology companies to giants in the United States and China in the past decade. London’s AI laboratory DeepMind was sold to Google in 2014 for about $ 600 million, while chip designer Arm was sold to Japan’s SoftBank in 2016. SoftBank is now trying to sell Arm to the giant American Nvidia chips for about $ 40 billion, in a deal that critics say will reduce competition.

Elsewhere in Europe, Apple acquired part of Dialog Semiconductor, a German chip company, in a deal valued at about $ 600 million, while PayPal bought Swedish payments start-up iZettle for $ 2.2 million. billion.

But Prakash of the Center for Innovating the Future said that the world will become more divided as nations and nation-states strive for technological sovereignty.

“As more governments use technology to reaffirm control, they also end up ‘limiting’ their relationship with the rest of the world,” he said, adding that “nations will act against each other in a way that works in the world if becoming fragmented. “