A realistic analysis of European digital sovereignty in 2025
The facts are clear: Europe is losing the digital battle against the United States and China. With more than 80% of its digital infrastructure imported and only about a 10% share of the global cloud services market, the continent faces technological dependency that threatens its economic and political autonomy.
The extent of Europe’s lag
The numbers speak for themselves. The seven largest U.S. tech companies—known as the “Magnificent Seven” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla)—have a market capitalization exceeding $12 trillion. In contrast, the seven largest European tech firms total only about $705 billion—20 times less than their American counterparts.
In revenue terms, the gap is equally striking: while these U.S. tech giants generated $1.72 trillion in the past 12 months, European companies barely reached $133 billion. Investment in artificial intelligence reflects this disparity: between 2018 and 2023, U.S. AI companies received €120 billion, compared to just €32.5 billion for European firms.
EuroStack: The European answer to digital dependency?
In February 2025, Europe launched the EuroStack initiative, an ambitious €300 billion project designed to establish the continent’s digital independence within the next decade. This comprehensive strategy covers seven interconnected layers: critical raw materials, chips, networks, Internet of Things, cloud infrastructure, software platforms, and data & AI.
The proposal includes creating a European Sovereign Technology Fund with an initial €10 billion, focused on developing federated and open-source systems. The plan also envisions a “European Procurement Law” prioritizing technologies developed within Europe in public acquisitions.
Structural obstacles Europe faces
1. Market fragmentation: Unlike the unified U.S. market of 313 million people or China’s 1.4 billion, Europe effectively operates as 30 separate markets. This fragmentation compels European startups to implement costly and complex expansion projects, slowing their growth. Spotify, the successful Swedish platform, exemplifies this issue: it had to exit its domestic market early to expand first into the UK and later into the U.S.
2. Regulatory differences and restructuring costs: Restructuring R&D teams across continental Europe costs about €200,000 per person (€250,000 in Germany), including collective negotiations, redundancies, and reindustrialization measures. Such costs are virtually nonexistent in the U.S., China, or India, limiting the agility of European companies.
3. Limited access to capital: U.S. and Asian tech companies founded after 2000 have raised an average of $7.3 billion, while European firms only gathered around €1.6 billion. Europe attracts three times less funding than the U.S., and within Europe, disparities are evident—France attracts three times less investment than the UK.
Regulation as a competitive advantage?
Europe has chosen to lead through regulation with initiatives like the General Data Protection Regulation (GDPR), the Digital Services Act (DSA), and the Digital Markets Act (DMA). While these regulations have not created European tech giants, they have positioned the continent as a global rules arbiter in the tech arena.
The European AI Act, implemented in 2025, establishes different transparency and audit levels depending on the risk tier of algorithms. Although this regulatory approach doesn’t produce champions in technology, it grants Europe credibility as a protector of consumers and transparency, free from conflicts of interest to favor local companies.
Current geopolitical challenges
U.S.-Europe trade tensions intensified under the second Trump administration. New U.S. tariffs on European automobiles, steel, and aluminum prompted the EU to respond with measures against U.S. digital exports. More than 100 European companies—including defense giants Airbus and Dassault—have called on the European Commission for greater technological independence.
The US Cloud Act remains a latent threat. This law allows the U.S. government access to data stored by American companies regardless of the physical location of servers, compromising European data sovereignty.
Sectors where Europe maintains strengths
Despite the bleak outlook, Europe retains leadership in specific sectors:
– Advanced semiconductors: ASML (Netherlands) produces the most advanced chip manufacturing equipment
– Music streaming: Spotify commands a global user base of over 615 million
– Pharmaceuticals: Novo Nordisk leads the lucrative weight-loss medication market
– Mobile gaming: Supercell (Finland) has games played daily by over 100 million people
The realistic verdict: Could liberation be possible?
Europe can reduce its digital dependency but not fully free itself in the short term. The numbers make it clear: U.S. dominance is too strong, European fragmentation too deep, and entry barriers too high for radical change.
However, Europe has real chances of success if:
1. It genuinely implements the digital single market by removing the 30 different national regulations
2. It coherently executes EuroStack with the promised €300 billion
3. It reforms its capital markets to compete with U.S. funding levels
4. It leverages its regulatory strength to set global standards
Conclusion
Europe will not be able to compete head-on with U.S. and Chinese tech giants in the short term, but it can build a viable alternative based on democratic values, sustainability, and transparency. The EuroStack initiative is the most ambitious to date, but its success will depend on genuine political will to overcome decades of fragmentation and digital nationalism.
The opportunity window is closing rapidly. If Europe does not act decisively in the next five years, its fate will be to become a digital colony of the superpowers. EuroStack is not just a political choice; it’s an existential necessity to preserve European autonomy in the 21st century.