Europe and America are moving at different speeds and in different directions. While the US is growing and expanding its tech leadership, Europe is retrenching. Since 2000, real disposable income has increased twice as fast in the US than in Europe, primarily because of low productivity growth. Only four of the world’s top 50 tech companies are European.

Will that change?

For the answer to be yes, speakers at the CEPA Forum 2024 Tech Conference said both Europe and the US must shift gears. Europe must embrace growth over-regulation. The US must avoid erecting trade and investment barriers. The EU-US Trade and Technology Council must not just be prolonged. It needs to be strengthened and deepened.

Speakers at the Tech Conference expressed hope. Many pointed to former Italian Prime Minister Mario Draghi’s long-awaited report about European competitiveness as a needed catalyst. Out is the past push for additional regulation. In is an emphasis on European integration, investment, and deregulation.

“We need to get our act together,” said Peter Borsos, Head of Communications of Sweden’s Ericsson Group. “The US needs a thriving Europe. We need your help to wake up.”

Ericsson recently inked a $14 billion deal with AT&T to build a new wireless network in the US. No European telephone operator could afford such an investment, Borsos lamented. The US has three major telephone companies. Europe has dozens. His own country Sweden, with a population of only 10 million, has four operators. Consolidation is the only chance for Europe’s operators to become competitive, according to Borsos.

A revived Trade and Technology Council is crucial. Since its inception, the Council has helped coordinate export controls against Russia, and by agreeing on the need to “de-risk” rather than “de-couple” from China. Its ambitions need to be expanded.

“The TTC took on “low hanging fruit,” said Arrow Augerot, Director of the Americas Public Policy at Amazon. “It needs leader-level impact.”

A danger is that European regulations hurt the continent’s need to revive competitiveness. Tech companies are blaming the new rules for slow product rollouts. Apple, for example, is not releasing new AI services for iPhone users in the EU because of what it called “regulatory uncertainty.” Meta did not release its Twitter competitor Threads in Europe until five months after it was available in the United States for similar reasons.

“If companies don’t launch services in Europe, that’s a problem,” said Augerot. “Europe cannot always be the first out of the gate to regulation. Look at compliance costs — if you spend all your money meeting new regulations, then you have less for R&D.”

European participants pointed to the new European Commission and in particular the appointment of Finland’s Henna Virkkunen as Digital Commissioner and Slovakia’s Maroš Šefčovič to lead on transatlantic relations. These appointments are “a statement of intent” and a vote of confidence in the transatlantic relationship,” said Lucinda Creighton, former Irish Europe Minister and a CEPA non-resident Senior Fellow. “A year ago, we focused on European tech regulation. Today we focus on competitiveness.”

From the American side, a recognition exists to avoid angering allies with legislation that favors US companies. Karen Kornbluh, Deputy Assistant to the President and Principal Deputy Chief, credited the Trade and Technology Council for defusing tensions over the Inflation Reduction Act, which poured billions into US green tech.

Allies are crucial to confront China’s tech challenge. Former Congressman Will Hurd lamented how Beijing dominates drone manufacturing, crucial to 21^st-century warfare. Allied nations need to be able to manufacture crucial hardware.

“We allowed China to dominate drones,” Hurd said. “We didn’t help Ericsson, we didn’t help Samsung.”

China won the drone market on “merit” and its victory should “serve as a wakeup call,” argued Lorenz Meier, CEO of Auterion, a company that makes drone operating systems. In order to catch up, all NATO nations should buy one fighter jet less to fund a massive drone buildout.

The allies must allow tech sharing among themselves. At present, export controls are difficult to navigate. “We need reform,” said Andrea Thompson, CEO of the Dakota State Applied Research Corporation and former Under Secretary for Arms Control and International Security. The AUKUS alliance between the US, UK, and Australia shines as a model. “We’re not going to solve the tech shortfall” by sticking to ourselves.

Bill Echikson is a non-resident Senior Fellow for CEPA’s Digital Innovation Initiative and editor of Bandwidth.

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.

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