Europe must allow its tech entrepreneurs to flourish

The European Commission last week presented a package of measures focused on achieving technological sovereignty. There are two goals to this plan: first, to make Europe a world-leading player in artificial intelligence; second, to be less reliant on American and Chinese technology.

The plan outlines four priorities: strengthening the semiconductor base through new legislation; developing cloud and AI capabilities through a unified regulatory framework; promoting open source as a lever for digital autonomy; and ensuring the sustainable digitalization of the European energy system. These measures build on existing initiatives and aim to protect Europe’s digital independence.

Europe, like many regional powers, has become highly dependent on US and Chinese technology. This is both at the governmental and public sector level, as well as at the corporate and individual level. Think Microsoft, Oracle, Zoom, Cisco, Google Cloud for the US and Huawei and Xiaomi for China, for example. As geopolitical tensions have risen in recent years, Europe has slowly awakened to this reality and is now looking to develop its own technological sovereignty. It comes from the simple observation that technology is intertwined with geopolitics.

So, what does sovereignty mean in this context? Is it only about data? Digital sovereignty means the capacity of a state, organization or individual to control their digital fate. This includes infrastructure, software, standards, data, governance and jurisdiction. For states, this means governing digital rules and data flows on their own terms, which involves the infrastructure (servers, networks and cloud), code and standards (software, algorithms and protocols), and data (ownership, storage and processing).

As geopolitical tensions have risen, Europe is now looking to develop its own technological sovereignty

Khaled Abou Zahr

An early example of states exercising such sovereignty was when Russia and China requested that Meta host its relevant data in their respective countries. But the question of data control is not limited to such extreme cases. The US’ Clarifying Lawful Overseas Use of Data (CLOUD) Act, which clearly inspired European lawmakers, reflects the broader reality of extraterritorial data access and jurisdictional reach over data held by US companies.

At the hardware level, chips represent perhaps the most critical vulnerability in terms of digital sovereignty. A foreign-controlled chip can put at risk every single layer above it. No matter if you develop your own software, store the data in a locally based cloud or even impose data governance. If the key hardware contains backdoors or is reliant on a foreign supply chain, there is no digital independence.

This is precisely why the EU’s Chips Act 2.0, announced last week, has been framed as taking sovereignty measures with the clear goal of reducing dependence on foreign semiconductor manufacturers. This would guarantee that the physical foundation of Europe’s digital infrastructure cannot be weaponized for espionage or cut off in a geopolitical confrontation.

Protection against economic spying is an important point. To address corporate espionage, experts state that there is a need to reduce structural vulnerabilities by controlling the systems, standards and jurisdictions through which data flows. If we consider that, with AI, due to vast amounts of sensitive data being continuously processed and transferred, the risk of exposure or strategic extraction of proprietary information increases significantly. This means that having control over the underlying technologies and maintaining strong governance frameworks is critical.

Protecting corporations, as well as individuals, is important so that they can manage their cloud services and have meaningful agency over their data and digital services. Even more so because the arena where sovereignty is starting to play out is in everything related to security and defense. Recent incidents have shown that dependency on others poses a high risk.

At the hardware level, chips represent perhaps the most critical vulnerability in terms of digital sovereignty

Khaled Abou Zahr

Yet here we face a quick question. What if the best software or hardware solution is available from a company in an allied country? And you need this tool to face greater enemies. What do you do? Do you forgo it and start to create your own? This is exactly what is happening today with the anti-Palantir campaign in Europe. Palantir, as acknowledged by security and defense officials, offers a tool that meets key challenges. Yet, some would like to forbid its use in Europe, even though a genuine substitute does not exist. So, does that mean full digital sovereignty might mean we need to accept lower security protections? This should not be the case.

There is no doubt that Europe and other regional powers should seek to enhance their positions and develop their own tech solutions, especially in security and defense. But it would be a mistake to frame this digital sovereignty framework as a tech war against the US and its companies. We should continue working with the US as it is a strong ally, particularly given the depth of transatlantic cooperation in terms of research, innovation and security.

A more realistic approach would be to pursue greater strategic autonomy, in which digital sovereignty should be understood not as a process of technological decoupling but of building greater resilience. Today, the risk is also from within, with fragmentation from one country to another. This means Europe needs to strengthen its own capabilities — remaining interoperable with trusted partners while reducing dependencies in critical areas.

This is why the future of sovereignty lies in the ingenuity of entrepreneurs. The US companies that dominate the digital landscape today, whether in cloud computing, AI or semiconductors, barely existed 20 years ago and that capacity for rapid, disruptive innovation is where true technological resilience lies. Europe has the talent and capacity to achieve the same.

Europe’s best bet is not heavy regulation but simplification: creating the conditions in which startups and scale-ups can move fast, attract capital and compete globally.

• Khaled Abou Zahr is the founder of SpaceQuest Ventures, a space-focused investment platform. He is CEO of EurabiaMedia and editor of Al-Watan Al-Arabi.