The world has changed fundamentally over the past 15 years. The neoliberal order—with its maxim of keeping markets free from political influence, promoting economic integration, and viewing globalization as the consequence of peace—is faltering; we are witnessing a renaissance of state power. National security interests, technological resilience, and digital infrastructure are once again core tasks of politics. There is talk of a “geoeconomic turning point.”
In this new framework, interdependencies are no longer seen as anchors of stability, but as strategic vulnerabilities. The instruments that governments are using seem familiar: export controls, extraterritorial regulations, digital standards, and, last but not least, the targeted decoupling of critical technologies. Russia’s suspension from the SWIFT system impressively demonstrated how supposedly neutral infrastructures can become geopolitical weapons.
Nowhere is this paradigm shift more evident than in the digital sphere. Technology has become the central battleground of the new geoeconomic order. Control over data centers, internet protocols, and data flows determines who sets standards and whose interests prevail globally. The United States is consolidating its dominance over hyperscalers (large providers of cloud computing services), software platforms, and AI models. China is pursuing a techno-authoritarian expansion strategy with its Digital Silk Road. And the European Union? It often remains a spectator, technologically left behind and strategically without a clear position.
The figures are alarming: Europe’s share of the global market for information and communication technology fell from 22 percent in 2013 to 18 percent in 2023. The US increased its share to 38 percent over the same period, while China remained at 11 percent. Of the 50 largest tech companies in the world, only five are from Europe (US: 31, China: 9).
The structural power in key digital infrastructures clearly lies outside Europe. Chinese providers such as Huawei and ZTE dominate 5G, supplemented only by European companies Ericsson and Nokia. The cloud sector is almost entirely led by US hyperscalers such as Amazon Web Services, Microsoft Azure, and Google Cloud. When it comes to semiconductors, Europe is dependent on Asian producers, primarily from Taiwan and South Korea. Any geopolitical conflict in the Indo-Pacific would thus expose an Achilles heel in European stability.
The situation is even more critical when it comes to data sovereignty. China controls access to its own digital space via the Great Firewall and at the same time uses platforms such as TikTok to gain influence over the data flows of Western users. The US dominates global data traffic via its digital platforms and, thanks to the CLOUD Act (Clarifying Lawful Overseas Use of Data Act), has extensive access rights to data from US tech companies, even if they operate outside the US.
Europe stands between two extremes: without isolation, but also without strategic access. One example: Although the General Data Protection Regulation (GDPR) marks a milestone in the protection of personal data, there is no coherent strategy for linking this protection to a competitive, data-driven economy.
Focus on Regulation
In the absence of a coherent vision of what Europe wants to be and achieve digitally, Brussels has focused on the obvious: regulation. Over 100 legislative initiatives have been launched since 2010—from the E-Commerce Directive to the Cyber Security Act and the AI Act. This regulatory activism is an expression of a defensive understanding of politics that minimizes risks but does not set a direction. The protection of fundamental rights and markets is undoubtedly a step forward in terms of legal policy, but without its own technological creativity, Europe will remain a rule-setting junior partner to non-European platforms. The “Brussels effect” (i.e., the international impact of European standard-setting) will only work in the long term if it is coupled with market attractiveness and technological sovereignty. Neither of these currently exist.
The complexity of European tech regulation places a particular burden on those who are supposed to be driving Europe’s promise of innovation: start-ups and SMEs. They are failing due to excessive compliance requirements, while global tech giants are upgrading their legal departments and continuing to grow unchallenged. The paradox is that the more successfully Europe regulated, the more dependent it became on the innovative power of third parties.
A look at European economic history shows that there is another way. When France and Germany founded the Airbus consortium in 1970, it was an act of political boldness. Instead of accepting Boeing’s market power, they focused on their own industrial vision, pooled resources, coordinated investments, and turned weakness into strategic strength. Today, Airbus is the global market leader—because of a common European ambition.
This kind of “Airbus moment” is long overdue in the digital sphere today. Geopolitical upheavals, growing unease about US- and China-dominated platforms, and calls for digital sovereignty are creating unique momentum. But instead of seizing this opportunity with determination, institutional and political blockages are paralyzing progress.
The EU’s Digital Strategy
With its international digital strategy of June 2025, the European Commission attempted to position its digital policy strategically on a global scale. On paper, this strategy responds to precisely those challenges that have shaped Europe in recent years: growing geopolitical competition and technological dependencies.
The document also contains a number of positive elements. The focus on sensitive digital infrastructures such as submarine cables testifies to a growing geopolitical awareness. Even more importantly, the European Commission explicitly commits to a human-centered, values-based approach, deliberately positioning itself between the market-oriented techno-capitalism of the US and the state-directed digital authoritarianism of China. The attempt to form strategic alliances with a network of over 30 international partnerships is also a step in the right direction.
However, ambitious individual measures are no substitute for a coherent overall strategy. The European Commission’s international digital strategy falls short of what the EU really needs: an overarching grand strategy for the digital age. Now would be the perfect opportunity to engage international partners who are also looking for a democratic alternative with a strategically focused offering.
Instead of a clear political narrative, however, the strategy presents an operational patchwork. It lists almost everything—from AI and quantum computing to semiconductors, the cloud, digital identity, and deep tech—and treats each technology as equally important. There is clearly a lack of strategic focus. Particularly problematic is the central implementation mechanism, the so-called “Tech Business Offer.” The commission plans to offer partner countries modular technology components in the hope that they will adopt European AI, cloud, or security solutions.
Yet, successful digital business models do not arise from offering technical modules, but from addressing specific user problems. Ultimately, this approach is reminiscent of the European Gaia-X project: technically well described, politically celebrated, economically inconsequential, and recently called a “crushing failure” and an “industrial disaster.” Instead, the EU should leverage its strengths in trustworthy governance, sustainability, and standard-setting to create technology-driven ecosystems that are driven by real demand.
Even more serious is the misunderstanding surrounding the concept of digital sovereignty. The European Commission sees it primarily as an opportunity for cooperation, not as a prerequisite for creative power. After all, cooperation is no substitute for one’s own power base. Those who want to have a say in sovereignty must build up their own capacities: in the cloud sector, in semiconductors, in AI models. Those who do not have these capacities remain dependent on others—no matter how many rules or partnerships they create.
Eventually, the digital strategy remains vague in terms of communication. There is a lack of reliable information on financing, governance, and political responsibility. Where exactly will the billions in investment that the commission is talking about come from? And who will be politically responsible if partnerships or projects fail?
The European Way
What Europe lacks is a clearly defined political agenda; a comprehensive vision that combines normative principles, technological capability, and geopolitical reality. This is precisely where our proposal for the “European Way” comes in: a strategic blueprint that anchors Europe’s digital future in industrial policy, makes it innovation-friendly, and embeds it in foreign policy. Developed by a network of academics, politicians, and business leaders, the paper defines six basic principles that outline Europe’s role in the world, both technologically and normatively: principle-based governance, strategic resilience, interoperability, sustainability, trust, and a decentralized economic system.
The principles offer a strategic conceptual solution to the question of how democracies can remain technologically sovereign and globally connected in the digital age. While the US relies on disruptive platform capitalization and China on state-orchestrated tech authoritarianism, Europe offers a third option for democratic technology design.
However, as long as the EU fails to apply this vision strategically across all levels of the technology stack, it will remain ineffective. Our central thesis is therefore that Europe cannot dominate everywhere but must prioritize strategically. It is about taking the lead where standardization, economic leverage, and resilience converge—for example, in basic AI models, cloud infrastructures, digital identities or quantum computing. In other areas, such as end-user platforms, trustworthy international partners and interoperability rules may suffice, because not every gap needs to be closed at the European level.
Digital sovereignty means being able to act independently when it matters. For this vision to become a reality, Europe needs structural reforms. A key lever would be an institutional mechanism under Article 20 of the Treaty of the European Union that would enable those EU member states willing to integrate to move forward together in key technology areas—beyond the unanimity that often leads to political paralysis today. This would not be a break with European integration, but rather its functional renewal in the digital age.
The mechanism could be based on three pillars: on strategic leadership decisions along the stack, for example in cloud, AI and quantum; on flexible integration formats, comparable to Schengen or the euro, which allow progress without risking division; and on joint investment and innovation platforms, for example through large European cooperation projects such as in microelectronics, which strategically boost existing programs and pool financial resources.
Securing Digital Sovereignty
The geopolitical component of this digital grand strategy is just as central as its economic foundation. After all, anyone who wants to secure digital sovereignty must take foreign policy action. Standards, protocols, and certificates are the geopolitical levers of the digital age. The “European Way” therefore envisages a targeted opening up to like-minded partners. Through a list of “trusted international partners” (including Canada, Japan, South Korea, Brazil, India, and Ukraine), the EU can specifically secure supply chains, research alliances, and data spaces. A “free trade initiative” with digital chapters that include sustainability criteria, interoperability, and data protection standards would accompany this development of strategic resilience.
The aim is to trigger a second “Brussels effect”—no longer through downstream regulation, as has been the case to date, but through the export of trustworthy technologies, open protocols, and human-centered standards. From India’s Aadhaar system to Brazil’s Pix and Ukraine’s Diia app, solutions that reflect European principles are emerging in many places. This is no coincidence, but rather an expression of massive global demand for a third, democratic alternative in the digital space. The EU can become a magnet for an alliance of digital democracies if it sees itself more as a strategic player and implements this vision in a creative way. This would require strong political leadership in Berlin, Paris, and Brussels: technology not as an administrative task, but as a powerful lever of European sovereignty.
Digital sovereignty is no longer a niche technical issue, but a geostrategic question. Europe has great potential: it has world-class research; it has established global credibility in the protection of fundamental rights and data ethics with the GDPR; it enjoys international trust that authoritarian tech models lack. But all these strengths will remain ineffective if the EU does not orchestrate them strategically. Europe is at a turning point. In the digital age, those who control capacities, set standards, and operate platforms determine the rules of the game. Regulation alone is not enough; Europe must become a bold and creative force. The “European Way” provides a strategic framework: it combines normative principles with technological priorities, institutional levers, and foreign policy alliances. Digital sovereignty for Europe does not mean isolation, but resilience through self-reliance.
But without clear responsibilities, governance, and a politically supported vision, any strategy remains a paper tiger. While the US and China have long been investing, scaling up, and setting standards, Europe risks being strategically late to the game. The EU must act now, not as a victim of global dynamics, but as a strategic driving force for a digital order that combines democracy, openness, and sovereignty.
Katja Muñoz is a senior research fellow at the German Council on Foreign Relations (DGAP) Center for Geopolitics, Geoeconomic, and Technology.
Kai Zenner is head of office and digital policy advisor of MEP Axel Voss in the European Parliament; he is also a fellow of practice at the TUM think tank in Munich.
