Europe Must Avoid Becoming a Digital Colony

Europe is under siege—not by armies but by supply chains and algorithms. Rare-earth minerals, advanced semiconductors, and critical artificial intelligence systems all increasingly lie in foreign hands. As the U.S.-China tech cold war escalates, U.S. President Donald Trump battles Europe’s attempt to regulate tech platforms, Russia manipulates energy flows, and the race for AI supremacy intensifies, Europe’s fragility is becoming painfully clear. For years, policymakers have warned about the continent’s reliance on foreign technology. Those alarms seemed abstract—until now.

Geopolitical flashpoints, from the Dutch lithography firm ASML’s entanglement in the U.S.-China chip war to Ukraine’s need for foreign satellite services, reveal just how precarious Europe’s digital dependence really is. If Europe doesn’t lock down its technological future, it risks becoming hostage to outside powers and compromising its core values.

Fragmented measures aren’t enough. A European Chips Act here, a half-implemented cloud or AI initiative there won’t fix a system where every layer—from raw materials to software—depends on someone else. Recent AI breakthroughs show that whoever controls the stack—digital infrastructure organized into a system of interconnected layers—controls the future.

The U.S. government ties AI research to proprietary chips and data centers through its Stargate program, while China’s DeepSeek masters the entire supply chain at lower costs. Europe can’t keep treating chips, supercomputing, and telecommunication as discrete domains; it needs a unifying vision inspired by digital autonomy and a grasp of the power dynamics shaping the global supply chain.

Without a coherent strategy, the continent will be a mere spectator in the biggest contest of the 21st century: Who controls the digital infrastructure that powers everything from missiles to hospitals?

The answer is the EuroStack—a bold plan to rebuild Europe’s tech backbone layer by layer, with the same urgency once devoted to steel, coal, and oil. That will require a decisive mobilization that treats chips, data, and AI as strategic resources. Europe still has time to act—but that window is closing. Our proposed EuroStack offers a holistic approach that tackles risks at every level of digital infrastructure and amplifies the continent’s strengths.

The EuroStack comprises seven interconnected layers: critical raw materials, chips, networks, the Internet of Things, cloud infrastructure, software platforms, and finally data and AI.

Every microchip, battery, and satellite begins with raw materials—lithium, cobalt, rare-earth metals—that Europe doesn’t control. China commands 60-80 percent of global rare-earth production, while Russia weaponizes gas pipelines. Europe’s green and digital transitions will collapse without secure access to these resources. Beijing’s recent export restrictions on gallium and germanium, both critical for semiconductors, served as a stark wake-up call.

To survive, Europe must forge strategic alliances with resource-rich nations such as Namibia and Chile, invest in recycling technologies, and build mineral stockpiles modeled on its strategic oil reserves. However, this strategy will need to steer clear of subsidizing conflict or profiting from war-driven minerals, as seen in the tensions between Rwanda and the Democratic Republic of the Congo and the latter’s criminal complaints against Apple in Europe—demonstrating how resource struggles can intensify regional instability.

Above this resource base lies the silicon layer, where chips are designed, produced, and integrated. Semiconductors are today’s geopolitical currency, yet Europe’s share of global chip production has dwindled to just 9 percent. U.S. giants such as Intel and Nvidia dominate design, while Asia’s Samsung and TSMC handle most of the manufacturing. Even ASML, Europe’s crown jewel in lithography, finds itself caught in the crossfire of the U.S.-China chip war.

Although ASML dominates the global market for the machines that produce chips, Washington is using its control over critical components and China over raw materials to put pressure on the company. To regain control, Europe must double down on its strengths in automotive, industrial, and health care chipsets. Building pan-European foundries in hubs such as Dresden, Germany, and the Dutch city of Eindhoven—backed by a 100 billion euro sovereign tech fund—could challenge the U.S. CHIPS and Science Act and restore Europe’s foothold.

Next comes connectivity, the digital networks that underpin everything else. When Russian tanks rolled into Ukraine, Kyiv’s generals relied on Starlink—a U.S. satellite system—to coordinate defenses. And U.S. negotiators last month suggested cutting access if no deal were made on Ukrainian resources. Europe’s own Iris2 network remains behind schedule, leaving the European Union vulnerable if strategic interests clash.

Meanwhile, China’s Huawei still dominates 5G infrastructure, with Ericsson and Nokia operating at roughly half its size. Italian Prime Minister Giorgia Meloni has even floated buying Starlink coverage, underscoring how urgent it is for Europe to accelerate Iris2, develop secure 6G, and mandate a “Buy European” policy for critical infrastructure.

A key but often overlooked battleground is the Internet of Things, or IoT. Chinese drones, U.S. sensors, and foreign-controlled industrial platforms threaten to seize control of ports, power grids, and factories. Yet Europe’s engineering prowess in robotics offers a lifeline—if it pivots from consumer gadgets to industrial applications. By harnessing this expertise, Europe can develop secure, homegrown IoT solutions for critical infrastructure, ensuring that smart cities and energy grids are built on robust European standards and safeguarded against cyberattacks.

Then there is the cloud, where data is stored, processed, and mined to train next-generation algorithms. Three U.S. giants—Amazon, Microsoft, and Google—dominate roughly 70 percent of the global market. The EU’s Gaia-X project attempted to forge a European alternative, but traction has been limited.

Still, the lesson from DeepSeek is clear: Controlling data centers and optimizing infrastructure can revolutionize AI innovation. Europe must push for its own sovereign cloud environment—perhaps through decentralized, interoperable clouds that undercut the scale advantage of Big Tech—optimized for privacy and sustainability. Otherwise, European hospitals, banks, and cities will be forced to rent server space in Virginia or Shanghai.

A sovereign cloud is more than a mere repository of data; it represents an ecosystem built on decentralization, interoperability, and stringent privacy and data protection standards, with client data processed and stored in Europe.

Gaia-X faltered due to a lack of unified vision, political commitment, and sufficient scale. To achieve true technological sovereignty, Europe must challenge the monopolistic dominance of global tech giants by ensuring that sensitive information remains within its borders and adheres to robust regulatory frameworks.

When it comes to software, Europe runs on U.S. code. Microsoft Windows powers its offices, Google’s Android runs its phones, and SAP—once a European champion—now relies heavily on U.S. cloud giants. Aside from pockets of strength at companies such as SAP and Dassault Systèmes, Europe’s software ecosystem remains marginal. Open-source software offers an escape hatch but only if Europe invests in it aggressively.

Over time, strategic procurement and robust investments could loosen U.S. Big Tech’s grip. A top priority should be a Europe-wide, privacy-preserving digital identity system—integrated with the digital euro—to protect monetary sovereignty and curb crypto-fueled volatility. Piece by piece, Europe can replace proprietary lock-in with democratic tools.

Finally, there is AI and data, the layer where new value is being generated at breakneck speed. While the United States and China have seized an early lead via OpenAI, Anthropic, and DeepSeek, the field remains open. Europe boasts world-class supercomputing centers and strong AI research, yet it struggles to translate these into scalable ventures. The solution? “AI factories”—public-private hubs that link Europe’s strengths in health care, climate science, and advanced manufacturing.

Europeans could train AI to predict wildfires, not chase ad clicks, and license algorithms under ethical frameworks, not exploitative corporate terms. Rather than only mimicking ChatGPT, Europe should fund AI for societal challenges through important projects of common European interest, double down on high-performance computing infrastructure, and build data commons that reflect core democratic values—privacy, transparency, and human dignity.

The EuroStack isn’t about isolationism; it’s a bold assertion of European sovereignty. A sovereign tech fund of at least 100 billion euros—modeled on Europe’s pandemic recovery drive—could spark cross-border innovation and empower EU industries to shape their own destiny. And a Buy European procurement act would turn public purchasing into a tool for strategic autonomy.

This act could go beyond traditional mandates, championing ethical, homegrown technology by setting forward-thinking criteria that strengthen every link in Europe’s digital ecosystem—from chips and cloud infrastructures to AI and IoT sensors. European chips would be engineered for sovereign cloud systems, AI would be trained on European data, and IoT devices would integrate seamlessly with European satellites. This integrated approach could break the cycle of dependency on foreign suppliers.

This isn’t about shutting out global players; it’s about creating a sophisticated, multidimensional policy tool that champions European priorities. In doing so, Europe can secure its technological future and assert its strategic autonomy in a rapidly evolving global order.

Critics argue that the difference in mindset between Silicon Valley and Brussels is an obstacle, especially the bureaucratic nature of the EU and its focus on regulation. But other countries known for bureaucracy—such as India, China, and South Korea—have achieved homegrown digital technology from a much lower technological base than the EU. Indeed, through targeted industrial policies and massive investments, South Korea has become a world leader in the layers of chips and IoT. The EU currently already has a strong technological base with companies such as ASML, Nokia, and Ericsson.

European overregulation is not the issue; the real problem is a lack of focus and investment. Until now, the EU has never fully committed to a common digital industrial policy that would allow it to innovate on its own terms. Former European Central Bank President Mario Draghi’s recent report on EU competitiveness—which calls for halting further regulation in favor of massive investments—and incoming German Chancellor Friedrich Merz’s bold debt reforms signal a much-needed shift in mindset within the EU.

In the same spirit, Commission President Ursula von der Leyen has launched a defense package providing up to 800 billion euros to boost Europe’s industrial and technological sovereignty that could finally align ambition with strategic autonomy.

If digital autonomy isn’t at the forefront of these broader defense and infrastructure strategies, Europe risks missing its last best chance to chart an independent course on the global stage.

To secure its future, Europe must adopt a Buy European act for defense and critical digital infrastructures and implement a European Sovereign Tech Agency in the model of the U.S. Defense Advanced Research Projects Agency—one that drives strategic investments, spearheads AI development, and fosters disruptive innovation while shaping a forward-looking industrial policy across the EU.

The path forward requires ensuring that investments in semiconductors, networks, and AI reinforce one another, keeping critical technologies—chips, connectivity, and data processing—firmly under the EU’s control to prevent foreign interests from pulling the plug when geopolitics shift.

Europe’s relative decline once seemed tolerable when these risks felt hypothetical, but real-world events—from undersea cable sabotage to wartime reliance on foreign satellite constellations—have exposed the EU’s fragility.

If leaders fail to seize this moment, they will cede control to external techno-powers with little incentive to respect Europe’s needs or ideals. Once this window closes, catching up—or even keeping pace—will be nearly impossible.

The EuroStack represents Europe’s last best chance to shape its own destiny: Build it, or become a digital colony.