“Never let a good crisis go to waste” is an adage Europe could use now. As it stares down the barrel of a loaded gun from US President Donald Trump, the region could seize an opportunity if lawmakers and regulators move quickly to bolster its tech sector, a critical growth driver.
With key services from the US such as cloud computing and artificial intelligence (AI) potentially becoming more expensive, Europe’s homegrown tech industry can reap an immediate advantage. Trump might complain loudly about how the US has been a victim of global trade, but the biggest beneficiaries of the booming AI business have been American. Now so-called hyperscalers — Amazon.com, Microsoft Corp and Alphabet Inc — could suffer from Trump’s tariff plans, as the steel, aluminum and copper they need to build vast data centers would become costlier.
Those expenses, coupled with the international resentment that Trump is cultivating, could increasingly put off Silicon Valley’s foreign clients. Dutch lawmakers have been calling on the government to stop the flow of Dutch data and apps to US cloud services. Lucky for Europe, it does not have to go far for alternatives, such as France’s OVH Groupe SA, Italy’s Aruba SpA and Scaleway. The French cloud computing firm, owned by telecommunications giant Illiad SA, has a low-single-digit share of the European cloud market, which is dominated by Amazon, Microsoft and Google.
That trio has more than 75 percent of the market, Scaleway CEO Damien Lucas said, adding that it is harder for European software makers to innovate, because a cut of the value they get goes to Silicon Valley.
“Every single innovation in the European Union ends up paying a fee to those US giants,” he said.
Some European customers are also concerned that Trump could ask Amazon founder Jeff Bezos to shut down Amazon Web Services (AWS), its cloud business, in much the same way the US threatened to unplug Elon Musk’s Starlink Services LLC in Ukraine, Lucas said.
Such jitters have helped prompt a more than 50 percent increase in enquiries from new, potential customers about shifting over to Scaleway, he added.
Now Lucas is pushing his staff to accelerate the company’s geographic expansion to areas such as Stockholm and Milan, and to more quickly develop cloud and AI tools that match those of Amazon, Google and Microsoft’s units. They have about 10 percent to go to cover all the bigger rivals’ cloud services, he said. Fortunately, Lucas has an influx of cash to work with: Illiad announced two months ago that it was investing 3 billion euros (US$3.41 billion) in its cloud and AI infrastructure, with much of that funding going to Scaleway.
EU officials also seem to be moving with speed. On Wednesday, the European Commission announced its AI Continent Action Plan, which commits 200 billion euros toward building out supercomputing infrastructure, skills development programs and supporting AI start-ups in EU. However, the best part of the plan involves helping smaller businesses comply with lengthy AI regulations and clearing obstacles that have hampered European competitiveness — problems highlighted by Italian Prime Minister Mario Draghi in a sobering, landmark report.
Such tweaks are sorely needed in Europe’s tech industry, where onerous rules make it difficult for academics to spin out of universities, or for start-up founders to grant their early employees with stock options. Deepening Europe’s single market would also help invigorate tech development, said Sebastian Mallaby, senior fellow at the Council on Foreign relations and author of The Power Law, a book on the history of venture capital.
“The US and China have done well generating unicorns, because of huge internal markets that make it possible to ramp up sales fast,” he said. “The EU still has some way to go here.”
The EU’s AI Act was a prescient and noble effort to fill the regulatory vacuum on AI, but it is mired in bloat and lacks specifics — something the new Action Plan seeks to address. If officials can seize the opportunity to move quickly and update the legislation to make it clearer, that could help the bloc’s competitiveness and the broader rollout of AI. Only 13 percent of European companies adopted AI tools last year, Eurostat said.
Trump’s tariff war might end up being be the geopolitical catalyst that Europe’s tech sector needed. Rather than wasting energy on retaliatory measures, leaders here should channel their efforts into strategic tech investments, streamlining regulations and deepening the single market. The region has long possessed the intellectual capital for greater technological self-sufficiency. Maybe it was just missing the existential urgency this trade crisis now provides. For savvy European policymakers and tech entrepreneurs, this is an opportunity to be seized, and one that could finally transform the region from a digital colony of Big Tech to its own technological powerhouse.
Parmy Olson is a Bloomberg Opinion columnist covering technology. A former reporter for the Wall Street Journal and Forbes, she is author of Supremacy: AI, ChatGPT and the Race That Will Change the World.
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