EU software companies push for digital sovereignty

Europe’s software industry is calling on EU governments to spur innovation through public procurement rules, saying the EU should take bolder action to secure independence from providers in the US and Asia.

“When it comes to technology, in particular software technology, Europe, lacks sovereignty,” said Yann Lechelle CEO of French software company Scaleway, at a conference organised by the cloud computing specialist on Monday.

In Europe, US companies have become sole providers of software needed for email, office applications and cloud services. But EU companies now want to catch a ride on the new political wave of technology sovereignty to challenge that status quo.

“I have been spoon fed by technology made in California, and I actually adore it,” said Lechelle. But as a result, Europe finds itself in a position where it could end up having little say in the digital technologies of the future. “The situation where we are now here in Europe, is that we get 100% of our technologies from Shenzhen and California,” said Lechelle. “I do wish to rebalance the current situation.”

The European Commission is relying on the broad uptake of digital services and the development of new technologies to reduce the continent’s greenhouse gas emissions and to recover from the coronavirus pandemic. At the same time, the EU wants to become less dependent on technologies from abroad. EU trade commissioner Thierry Breton is the Commission’s torchbearer for “open strategic autonomy”, a plan to incentivise local development and production of sensitive digital technologies such as quantum computers, microprocessors and artificial intelligence.

Successful digital start-ups in Europe are usually bought by US multinational companies or move to the US to raise the capital they need to grow. Global online conferencing software company Skype, founded in Estonia, and for a while a European tech star, was bought by Microsoft in 2011 for a hefty €8.5 billion.

UiPath, a process automation specialist, was founded in Romania but moved its headquarters to New York when it listed on the New York Stock Exchange in April. The company is now valued at $35 billion.

France leading the way

France recently announced that every new digital service commissioned by the government for citizens must be based on a public cloud. “The French government went very far by publishing […] a doctrine that says that every new project built for, or on behalf of the government, needs to be built on the public cloud,” said Lechelle.

The French government is also planning to digitise public administration and to offer citizens and institutions software, with the aim of consolidating France’s digital sovereignty. “This transformation needs to rely on cutting-edge, sovereign cloud infrastructures,” said Amélie de Montchalin, French minister in charge of reforming public administration.

France and Germany have joined forces to launch GAIA-X, a cloud computing platform intended to set joint European standards for cloud services and challenge the dominant US providers, Amazon, Microsoft and Google. The system would let Europeans use cloud services from any supplier and be able to switch seamlessly between them, while benefiting from complete transparency on who has access to the data.

On many occasions, France has taken the initiative and launched disruptive innovations, noted Bert Hubert, co-founder of Dutch software company PowerDNS. France was the home of Minitel, the world’s most successful online service before the world wide web and was the first country to launch a high speed rail service in 1981.

Digital innovators want to see France’s move to put all public services on a public cloud coupled with more tangible schemes. “I would love to see some concrete initiatives,” such as building a European email infrastructure to compete with the US platforms, said Hubert.

Minitel and other examples show France has “a bigger impact and a bigger reach than a country of that size would normally have,” said Hubert. But replicating such past successes today is challenging because governments across Europe would need to commit to building pan European digital infrastructures. In terms of the prospects, the Dutch government is “taking a real a backseat on this stuff,” Hubert said.

However, there are role models. That Europe has its own Galileo satellite navigation system is down to the fact that countries decided and took action together to reduce their dependence on the GPS technology developed by the US military. “You can now get your navigation needs from China, Russia, the US or Europe, and that's a good situation,” Hubert said. “That's a nice balanced situation.”

European software companies would like to see the same happening in their field, but that requires coordination among governments on dealing with highly competitive US software and cloud firms setting up shop in Europe, and to devise a plan to boost the competitiveness of more local companies. “I hope that we can move back to such a situation where we can pick and choose technologies and not get all our technologies from outside of Europe,” said Hubert.

A tax on digital services was put on hold this week until the G20 group of world leaders comes to an agreement on a 15% global corporate tax rate. If implemented, the digital services tax would end the privileged taxation status in Europe for companies like Amazon, Google, Facebook and Microsoft.

For Jeff Bullwinkel, director of legal and corporate affairs at Microsoft, Europe’s focus on digital sovereignty will drive economic competition and foster the emergence of tech champions in Europe. “It means really protecting citizens and preserving national security and promoting economic growth,” he said.