Is Europe behind in tech? It's time for a mindset shift
Let’s be honest: when you think of cutting-edge technology, your mind probably jumps across the Atlantic to Silicon Valley, or perhaps increasingly, to Asia. For too long, Europe has seemed to be lagging behind, particularly when it comes to the digital realm. We’re massively dependent on tech solutions from elsewhere, and it’s a trend that needs to be addressed.
As someone who has built numerous software systems, I’ve seen it firsthand. My work, like that of countless others, relies almost entirely on American big tech servers – AWS, Azure, and Google Cloud. I’ve never once been asked to deploy an application on a European provider like Hetzner or Scaleway. This dependency extends to our everyday tools too: Microsoft Office, Google Workspace, Slack, Dropbox, Notion – they’re all American SaaS products. This means a constant flow of our data to our counterparts across the pond. And when it comes to physical production, we’re miles behind China, which has become the world’s fabrication hub.
Even in the rapidly evolving field of AI, we find ourselves playing catch-up. Everyone’s using ChatGPT, and I’m even using Gemini to help draft this post. While I’d love to embrace European alternatives like Mistral’s Le Chat, they simply haven’t achieved the same widespread adoption.
Why we’re behind: more than just tech
Our reliance on foreign tech isn’t just about a lack of innovation; it’s rooted in several systemic issues. There’s a significant venture capital gap between Europe and the US, especially when it comes to scaling companies. European startups often struggle to raise the large, late-stage funding rounds needed to compete globally, sometimes forcing them to seek US investors or even relocate. This is partly due to fragmented capital markets across the EU, which create smaller pools of private capital compared to the unified US market.
There’s also a perceived cultural difference in risk appetite among both investors and entrepreneurs. European investors are sometimes seen as more cautious, prioritizing proven traction over ambitious “moonshot” ideas. This can contribute to a brain drain, where top tech talent, seeking more attractive opportunities and often higher salaries, leaves Europe for the US. Furthermore, European startups can face less access to cutting-edge cloud infrastructure, advanced test environments, and large datasets compared to their American counterparts, which can slow down product development and scaling.
It’s not too late: lessons from China
But here’s the crucial point: this can all be fixed. China has proven that a dramatic shift is possible. I remember a time when “Made in China” was synonymous with cheap, disposable trinkets. Fast forward to today, and China is producing world-leading products, from electric vehicles and electronics (yes, including iPhones) to steel and solar panels. They’ve transformed into a frontrunner in countless industries, building products of enormous quality.
This incredible transformation shows us that it’s absolutely not too late for Europe to get back in the game. What we need is a fundamental shift in mindset and drive. China’s journey from producing “junk” to world-leading goods took a couple of decades. We need to accept where we are and start taking ownership of our technological future.
The path forward: unity over division
Crucially, the European Union must tackle this challenge as a cohesive whole. The idea of individual member states trying to solve the same problems independently has gotten us into this position. We must unilaterally tackle this together.
Of course, there are significant hurdles to overcome:
- Language Barriers: Europe is incredibly diverse, and language is a primary divider. Apart from their native tongues, only about 50% of people in the EU can hold a conversation in English. To create truly European products, multilingual capabilities must be baked in from the very beginning, which undeniably adds complexity.
- Cultural Differences: Our rich tapestry of cultures, while a strength, can also present challenges in standardizing approaches and product development.
- Nationalism vs. Cooperation: A segment of the EU population prioritizes nationalistic ideals over increased international cooperation, which can hinder unified efforts.
- Varying Regulations: The patchwork of different rules and regulations across member states makes it challenging to scale solutions across the entire bloc. While GDPR is lauded for privacy, its complexity and inconsistent application can sometimes stifle innovation, particularly for smaller startups, by creating barriers to data utilization for AI development.
Promising initiatives on the horizon
Despite these challenges, there are some very promising initiatives already underway:
- Mario Draghi’s report on EU competitiveness has certainly sparked important conversations. I am really curious to see what will come out of it.
- The proposed EU Digital Identity Wallet is an excellent concept that absolutely needs to become a reality, streamlining digital interactions and empowering citizens.
- EU Inc is an initiative advocating for a standardized business entity and tax structure across the EU, which would be a game-changer for businesses operating across borders.
And let’s not forget, Europe does have its own tech success stories. We just need way more of them to be able to compete on a global scale.
Let’s start the conversation
Over the coming weeks, I plan to delve deeper into each of these points, exploring the intricacies and potential solutions. Many of these ideas are, at this stage, more my opinions and feelings than hard data. Part of the goal of this blog is to open up this discussion and be exposed to diverse facts and opinions from others. If you feel something I’ve said is off, please don’t hesitate to contact me. I’m always happy to correct or adjust my opinions if I’m demonstrably wrong about something.
Ultimately, the EU needs to balance crucial regulation with a strong focus on fostering innovation and creating an environment where startups can thrive and scale. It’s not just about government policy; it’s also about cultivating a more entrepreneurial, risk-tolerant, and globally ambitious startup culture across Europe. This blog is an attempt at gathering with people who want to build this future. To discuss progress together. To showcase the promising projects. To celebrate successes and failures to get us there.