Europe's Plan to Ditch American Tech

本站添加: 2026-05-09

[00:00:00]It's probably fair to say that most European leaders are, let's say, rethinking their relationship with the United States at the moment.

[00:00:07]>> Europe has to be very careful. Certain places in Europe are not even recognizable.

[00:00:12]>> Europe is not doing a good job in many ways. Your countries are going to hell.

[00:00:17]>> This net has been cast far and wide.

[00:00:19]from restarting a European arms boom to the EU imposing tariffs on Americans.

[00:00:24]But perhaps most importantly of all is bringing an end to America's tech dominance over Europe. It's not exactly a secret that America dominates the world of tech. But it can be surprisingly easy to forget that the device you're watching this on, the software it uses, and the apps you're consuming it on are almost all certainly owned by an American tech company. This has always made European governments a little uncomfortable, but today it's become impossible to ignore. And over the past year, governments across Europe have been quietly launching alternatives. A panuropean payments network to rival Mastercard and Visa. An open messaging infrastructure to challenge WhatsApp. Even a homegrown AI model built in Paris. All of it part of what would be the most ambitious technological transformation the continent has attempted since the dotcom boom. If it works, it's an opportunity to finally take back control of the very infrastructure that sits at the heart of their economies and save hundreds of billions of dollars in the process. But it's also a massive gamble. Tech has become such a staple in modern life that it's easy to forget that it has deep roots. And these roots go far deeper than anybody in Brussels has fully reckoned with. hospital records, bank transfers, surveillance, even the command system behind Europe's nuclear weapons. All of it runs on American technology. It's a system that took decades to build. And now Europe is trying to undo it all in a matter of months. The only question is, are they already too late?

[00:01:50]Okay, given the recent rift that's been emerging between Europe and the United States, it's quite easy to imagine them as fundamentally different places. But at the most basic level, the US and Europe are actually remarkably similar.

[00:02:02]Both have similar populations, similarsized economies, and most crucially are some of the wealthiest places in the world. However, with all of that said, when it comes to technology, they couldn't be more different. If you were to combine the total value of the four biggest tech companies in Europe, they wouldn't even be worth half of Amazon. And while that may seem abstract, this gap shows up in basically every aspect of people's everyday lives. Take something as mundane as paying for your morning coffee. When a European taps their card at a till, in a split second, that transaction travels to a server in the United States, gets authorized by either Visa or Mastercard, and then travels back together. Visa and Mastercard process approximately $4.7 trillion worth of transactions across Europe every year, meaning virtually all European card and mobile payments currently run through non-European infrastructure. That obviously creates a massive vulnerability as if America wanted to, they could simply decline to authorize European transactions, effectively shutting down the European economy overnight. Europe is all too aware of this, but wanting to do something about it and actually doing something about it are two very different things. Think of it like this.

[00:03:12]Imagine you're trying to set up a new social media company, which you want to compete with YouTube. The main barrier to success here isn't really that YouTube is an overwhelmingly great product. I mean, any disgruntled creator will probably tell you that. Instead, YouTube's main advantage is just the fact that everyone's already on it.

[00:03:29]Viewers know that anytime they go onto the site, their favorite creator will be there. And equally, creators know that if they want to build an audience, YouTube is the best place to do it. In effect, the value of the service comes from the fact that everyone else has agreed to use it. Now, it's a bit less obvious, but the exact same thing happens when you've got payment systems like Visa or Mastercard. When you go to pay for something, you want to use a card that every shop accepts. And every shop wants to accept a card that every customer carries. So Visa and Mastercard became the default. Not necessarily because it was the best product, but because it got there first. As arbitrary as that might sound, the EU is quickly starting to find out just how hard these systems are to dislodge. Their first real attempt to do this came in 2024 when 16 major European banks pulled together and launched an alternative payment system called Wero. The idea was straightforward, a European-owned network that could do almost everything Visa and Mastercard could without the data and the dollars flowing back to America. And to be fair, technically it was an impressive product. The only problem is that basically nobody uses it. Since its launch, the app has processed around€ 7.5 billion in transfers. Visa and Mastercard, meanwhile, process over $7 trillion in European payments every year, around 10,000 times more. And that's just one example of a network monopoly dominating the European market. Online messaging, social media, the app store. In all of these cases, we see the exact same dynamic playing out. And in each of them, it's the American companies which are winning. Now, to be fair, in the case of Wero, the EU never really forced anyone's hand. Adoption was essentially voluntary. And unsurprisingly, most people just didn't bother. But that approach seems to be changing. Earlier this year, European government signed a memorandum of understanding to build a fully panuropean payment system. In theory, it would automatically connect existing national payment networks across the continent into a single system, which would then allow transfers to happen across the continent without any need for American involvement. And payments isn't the only area where the EU is becoming more aggressive. Apple, for example, has been forced to allow app distribution outside of the app store on iOS for the first time in the iPhone's history, which means that European developers can now sell software directly to users without paying Apple's commission, saving companies billions of dollars. At the same time, WhatsApp was required to open up to third-party messaging apps, meaning for the first time, European users can now message people on entirely different platforms without switching apps. This is all effectively the first part of Europe's plan. create new laws and regulation specifically designed to break the American network monopolies which dominate European markets. It's one of the most aggressive regulatory moves any major economy has made against big tech. The kind of thing which would have seemed completely unimaginable even 5 years ago. But with that said, even if they do manage to pull it off, the truth is that it only really scratches the surface of European tech dependency. A good way of thinking of all the technology that runs the world today is a bit like an iceberg. At the top sits apps like Gmail, Chrome, and Maps, things that we use every day. Just below that sits operating systems, developer platforms, and content delivery networks. But right at the bottom of the iceberg and taking up pretty much all the space is cloud computing. Every time you use the internet to send an email, look something up, or pay for something, you're creating digital data, which needs to be stored and processed somewhere. Today, that almost entirely happens in what is known as a data center. enormous warehouse buildings, sometimes covering the area of several football pitches, packed floor to ceiling with computer hardware running around the clock. Building and maintaining infrastructure at that scale obviously requires a lot of money. So, the industry is basically dominated by the three players who can afford it, Amazon, Google, and Microsoft. Together, these companies own and operate around 70% of the cloud capacity running across Europe. Now, that obviously means that Europe is missing out on a huge amount of money. all of which get sent to American businesses and shareholders instead. But there's actually a much more significant risk that comes with this dependency. In 2018, America passed a law called the Cloud Act, which gives US authorities the power to demand data stored on Americanowned servers regardless of where they are in the world. This isn't just imaginary leverage either, as America has used this power before. After Russia annexed Crimeir in 2014, the US blocked Visa and Mastercard from processing Russian payments. effectively stopping their customers processing payments overnight.

[00:08:04]This left hundreds of thousands of Russians with credit cards that now simply didn't work, freezing massive portions of the economy overnight. Now, nobody is seriously suggesting that America would do that to Europe. But either way, it's still a fairly significant negotiating chip to hand to anyone, even someone you thought was a close ally. It's also important to remember that cloud infrastructure is just one example. Computer chips, nuclear capabilities, even nuclear defense capabilities are all heavily dependent on US technology. Even if Europe were able to create alternatives to things like WhatsApp, Mastercard, or Gmail, it wouldn't change the fact that the infrastructure they all rely on is still controlled by the United States.

[00:08:44]Now, as wise as YouTubers like to think they are, this isn't some groundbreaking fact that we've just unearthed. In fact, the EU has known about this for a while, and there's actually already been a couple of high-profile attempts to try and build Europe's own tech infrastructure. The most prominent of these was something called Gaia Xed, launched in 2019 as a joint FrancoGerman initiative to build a sovereign European cloud infrastructure that European businesses and governments could use without rooting their data through American servers. However, 5 years on, it had produced almost no actual infrastructure. and one of its founding members described it as a crushing failure and a colossal waste of time.

[00:09:22]Now, it's easy to blame EU bureaucracy, and that does play a role, but the more fundamental problem is far more simple.

[00:09:28]Each year, Europe invests around 700 billion less than the US on tech, roughly double what the entire EU spends on defense. Even projects like Gaia X, which were meant to be groundbreaking, never saw more than $200 million in funding, practical pennies compared to what American firms spend. However, what's a bit more surprising about this is that both blocks actually invest roughly similar amounts of public money into tech research. And the difference only really emerges when you take a look at private investment. At pretty much every level of fundraising, European companies raise around 80% less than their American counterparts, which means two tech startups can come out of equally good universities with equally talented engineers. But within a few years, the American ones would have 10 times the budget. This creates a self-reinforcing cycle. The lack of capital means European companies can't grow fast enough to prove themselves.

[00:10:20]And because they haven't historically grown to global scale, investors never believe that they will. And so that capital never comes. This is only made worse by the fact that unlike in America, the huge amounts of capital and wealth which would be used to invest in these companies comes from inherited money. Wealthy families who have passed their money on for generations. And because of that, European investors tend to be a lot more focused on preserving wealth rather than taking on big risky bets. The kind of bets which you need in order to get tech companies off the ground. If Europe is really serious about catching up with American tech, then building a few alternative apps was never going to be enough. The real problem is that European companies simply can't raise the money they need to grow, or more importantly, build the infrastructure Europe needs to be truly independent. It's a problem that the continent has been trying to tackle for years with very little progress to show for it. So, in September 2023, the EU got Mario Draghi, the former president of the European Central Bank and one of the most respected economists in the world, to write a report diagnosing what he thought was exactly wrong with the European economy and what it would take to fix it. Today, it basically stands as the Union's blueprint for closing the gap with America and getting off American tech in the process. And this plan effectively breaks down into three main parts. The first and in some ways the most fundamental is to finally make Europe into a single unified market.

[00:11:43]Something it is claimed it has done for decades but never quite managed in practice. To understand why that matters, think about what actually made Google and Amazon into the giants they are today. Before either company ever thought about going global, they had the entire United States to grow into. A single market of 330 million people all operating under the same laws. That home market is what gave them the space to build the infrastructure needed to eventually take on the world. Now, you might expect that European companies would have the same thing. After all, it is called a free trade zone. But the reality, especially for tech companies, is very different. Because each country maintains its own data protection regulations, its own customer law, and its own rules around digital contracts, a startup trying to operate across all 27 member states faces a different legal reality in each one. That means a European company building say a healthcare data platform has to hire separate legal teams from Germany, France, Poland all before it has a single paying customer inside its home country. That means the actual costs of these barriers are inevitably hard to calculate. But the best estimates that we have so far suggest that it could be equivalent to a tariff rate of around 45% between EU countries. And for businesses trying to scale, that is a huge additional cost that American companies simply don't face. Of course, given that each member state is still also their own country, it's extremely hard for the EU to actually force everyone to adopt the same rules. So to get around this, Draghi proposed the 28th regime. The idea is basically to give companies the option to opt out of national regulatory schemes and operate under a single EUwide rule book instead.

[00:13:22]In doing so, European tech companies would finally have a home market big enough to actually grow and compete with their American counterparts in. If they could get it passed, it would be a massive free win. The trouble is is that it requires every member of state to voluntarily hand over some of their regulatory power to Brussels, which is unsurprisingly not something they are very keen to do. But regardless of whether or not the idea actually gets implemented, the whole process reveals a much bigger issue facing tech companies in Europe. They are insanely regulated.

[00:13:53]Now, don't get me wrong, a lot of the regulations that they've passed do sound reasonable on paper. Things like the universal charging port, which makes all phones and tablets use a USBC charger, a very convenient for day-to-day consumers. But even Apple, whose Lightning connector was directly targeted by the law, still had to redesign its entire iPhone product line for the European market, which is at a compliance cost running into hundreds of millions of dollars. Given that they're one of the most profitable companies in history, they were able to absorb this without too much issue. But for a smaller European startup, those costs would be crushing. So a big part of Draggy's plan to help European tech is bluntly for the government just to do less. The report explicitly called for a 25% reduction in reporting requirements for businesses, which if implemented would make it far more easy for European companies to compete with their American counterparts. And that brings us to the last and possibly most radical proposal to get more money invested into European tech companies to fundamentally change how the retirement system works. In the United States, when people save for their retirement, that money typically goes into a fund, which then gets invested back into company's stocks.

[00:15:03]That means that the entire tech ecosystem is constantly being flooded with money from everyday people saving for their retirement. But in Europe, it's totally different. Governments collect money from workers today and use it to pay for retirees today, a system known as pay as you go pensions. Because of this, the total amount of pension money in the EU, which is invested into the stock market, is equivalent to just 32% of the block's GDP compared to 142% in the US. That gap is a large part of the reason why American tech companies are able to raise so much more money.

[00:15:35]It's not just that Americans are more entrepreneurial or willing to take more risks. It's also that there is an enormous reservoir of long-standing cash savings in the US that needs to be invested somewhere. The Drageru report effectively proposes two things to change this. Firstly, making workplace pension savings the default for European workers. That would mean rather than having to actively choose to save, you'd have to actively choose not to. In theory, boosting the amount of money that could be injected into EU tech companies. And secondly, stronger tax relief on pension contributions. Right now, the incentive to save into an invested pension fund varies wildly across Europe, but generally they are pretty weak. The proposal is to make it consistently attractive everywhere in the same way that a 401k works in the US so that ordinary workers across the continent are actually putting money into these funds which get invested into companies. I get that these might not be the most headline grabbing ideas, but the reality is that actually replacing American RET requires a lot more than just building alternatives. Whether any of it actually happens though is a different question. One year on from its publication, only around 11% of the report's recommendations had been fully implemented. The larger member states have dragged their feet on regulatory harmonization, and the pension proposals remained deeply contentious, and the 28th regime idea only reached the commission in early 2026. And that's really the deeper problem running through all of this. From the Draghi report to Gaia X to Wero, getting anything through the EU's web of regulations is very tough. On paper, there are perfect circumstances to finally get the continent off American tech. The only question is whether the political will is strong enough to actually make it