Europe’s Tech Conundrum

Post-Brexit Europe presents a dichotomy between the private tech sector and its public governance which remain two interrelated, but still not sufficiently converging dimensions. Roland Benedikter argues that the EU must do more to get them cooperating in order to keep track in a rapidly changing global ecosystem.

In the recent phase of trade wars for technological supremacy between China and the U.S., Europe has tried to keep a rather low profile and to concentrate on its own progress – with mixed results. While, for example, Europe features among the leading powers in peaceful space exploration, and while its main nations are among the world’s high-quality tech manufacturers, it has a rather modest profile when it comes to promising experimental or high-risk future technology innovation, facilitation, development and deployment.

In a re-globalizing world decisively driven by technological advancements, Europe has done relatively well over the past few years from one perspective and not so well from a second – pointing to the two main dimensions in play. First, the private technological sector and its respective actions, successes and shortfalls. Second, the governmental sphere. What do European governments, including the supranational EU government: the EU Commission, do to have a place in the sharpening global contest for techno-advancement? Not enough with regard to an overarching policy and strategy. Europe’s private and governmental spheres remain two in many ways interconnected yet different dimensions, thus they must be first discerned and then interconnected to get a realistic picture.

The private sector

Let’s start with the first dimension: the private technological sector. Objectively over the past years it has been constantly featuring among the best. According to official EU data, from 2015-2018, i.e. within three years, Europe’s private early-stage tech-sector has quadrupled its investment as well as the output of successful start-ups. In 2018, the overall investment in the European tech sector reached a record of 23 billion $, up from 3 billion $ five years earlier. In 2019, the sum stood at 34 billion $, indicating a clear trend towards steady growth. The Coronavirus of 2020-21 broke the cycle, but only to a certain extent and with predictions of rapid recovery: in 2020 according to venture capital’s firm Atomico’s forecast European start-ups will have raised a record 41 billion $.

This trend is backed by the growth rate particularly of newer and smaller tech companies in Europe, which have seen a better value increase after going public as compared to the U.S. In 2018, U.S. startup companies on average scored a 42 percent increase when they went public, European ones 222 percent. Also, the survival rate for start-ups, which is an important indicator of tech innovation investment sustainability, shows that the number of European start-ups that come into existence is lower than the U.S., yet the survival rate has been in average around seven times higher than in the U.S. for their first five years of existence. All this indicates that comparing the European avant-garde tech areas with, for example, the liberal (and according to Mark Zuckerberg’s April 2018 U.S. Congress hearing statement “extremely left-leaning place”) Silicon Valley, we see that the latter is an ecosystem that is very productive but generates many who do not survive beyond a relatively short time frame, while the former is smaller but more sustainable.

Continental Europe is perhaps less fertile in its company productivity, but in general more durable. Europe had an investment of around 15 billion $ total in the avant-garde technology sector in 2018, while in 2019 it was 16.5 billion $. With this, Europe was in the process of slightly surpassing the US in tech investment growth; and according to data by market research firms it may surpass the U.S. also with regard to the total number of successful start-ups in a multi-year outlook, i.e. until 2022.

This implies that in the private technological sector Europe is doing comparatively well. This is a development which is difficult to compare though with the Eastern developments mentioned, i.e. the rising tech-giant China. China has a quite different notion of the “private sector”, and of “private” in general, including the intersection between “private” and technology, for example in the field of data collection, data use and surveillance. The respective Chinese activities abroad were the reason why U.S. president Trump after the November 3, 2020 presidential elections banned Americans from investing in 31 civil firms whose work is supposed to benefit the Chinese military. In contrast, Europe’s private sector in principle tries to put effort on the integration of sustainability, green technology, and niche technologies. And it tries to be among the best in these fields without waging trade wars, as far as possible.

The governmental sphere

Yet, what about the second dimension involved: the governmental sphere? In contrast to the private sector, European tech governance remains, in the round, not yet sufficiently fit for the emerging new global pattern, and neither is, as of now, the EU as an administrative whole when it comes to tech foresight and strategic anticipation. Unlike the private sector, the European governmental sphere is not doing enough to promote and foster a European joint economic-technological strategy for 2020-30. National strategies remain often too short-sighted and thus tactical plans rather than foresight or anticipation in the more encompassing and precise sense.

For example, the German Federal Government launched its Artificial Intelligence Strategy (Künstliche Intelligenz Strategie) in November 2018, and renewed it with an updated strategy in December 2020. It is an in principle ambitious endeavor when it comes to “green AI technology” as a unique selling point and competitive advantage. The German stance is also exemplary with regard to the civic dimension and democratic participation, for example by installing a “House of the Future” called “Futurium” in September 2019 in the governance quarter of Berlin and by organizing “Future days” since as early as August 2015 involving a representative cross-section of the German population. The weak side though is in the numbers. Germany aims at investing, until the end of 2022, just about the amount of money for developing and incentivizing AI which single Chinese high-tech-zones are aiming to invest per year. This is mirrored by the EU’s public investment in AI research and innovation, which in its “EU Priority Program 2019-2025” amounts just to 1,5 billion Euro, with the goal to expand this to 20 billion Euro until the end of the decade.

Is this competitive in the long run? Probably not. For the single year 2020 China’s government had investment announcements in AI alone of 70 billion $. The Chinese government in May 2020 issued plans for a 1.4 trillion $ tech investment program until 2025. In addition, more than 20 of China’s 31 provinces have announced plans to invest in cutting-edge technologies such as AI and the Internet of Things (IoT) for about 1 trillion $. The goal of the Chinese authorities is clear: advance in all strategic fields in order to outperform democracies, ultimately boosting the legitimation of the authoritarian-populist system and proving its superiority over allegedly “weak and slow” alternatives.

In sum

If democracies want to defend their systems Europe’s governments must work together to turn the wheel as soon as possible to better sustain their private sector, and to make it stronger by the merger and integration of regional, national and European funding and incentivization programs that include anti-populist, anti-authoritarian and in general more pluralism-oriented “enlightenment” measures for new and avant-garde technologies. And Europe must do more to interconnect its own and partners’ efforts towards potentially imminent scientific breakthroughs such as sustained, high-fidelity long-distance quantum teleportation which is regarded as the prerequisite for a “practical quantum internet”.

On this and other future fields, European governance must concentrate on peaceful advancements of potential public benefit and further and sustain the private sector to achieve them - both for Europe’s own economic, social and political benefit, and for the sake of international cooperation and progress to uphold the liberal global order increasingly threatened by the authoritarian use of technology.

Roland Benedikter is Co-Head of the Center for Advanced Studies of Eurac Research Bozen-Bolzano, Italy, and Research Professor for Multidisciplinary Political Analysis in residence at the Willy Brandt Centre of Wroclaw University, Poland. Contact: roland.benedikter@eurac.edu.

Image: Surian Soosay via Flickr (CC BY 2.0)