European elites cannot close the gap in global influence without their own digital and industrial champions.

While Europe has a powerful "regulatory superpower" role that gives it significant global influence, this power is ultimately limited and reactive.

Without its own large-scale tech companies and industrial leaders, Europe remains dependent on U.S. and Chinese technology, which grants those nations a deeper and more fundamental form of influence over the global economy and security.

The "Regulatory Superpower" is a Defensive Strategy 

Europe's primary source of global influence has become its ability to set de facto global standards through its vast market. This is often referred to as the "Brussels Effect." By creating comprehensive regulations like the General Data Protection Regulation (GDPR) and the AI Act, Europe compels multinational corporations to comply with its rules if they want to operate within its market. This strategy gives Europe a powerful voice on issues of data privacy, consumer protection, and ethics.

However, this influence is largely defensive and does not address the core issue of a lack of domestic champions. Europe can regulate the behavior of foreign tech companies, but it cannot dictate their innovation, intellectual property, or supply chains.

• Reliance on Foreign Infrastructure: Europe's reliance on U.S. and Chinese cloud services, software, and hardware creates a deep-seated dependency. For example, U.S. providers account for two-thirds of the EU cloud services market, and a vast portion of Europe's consumer electronics and 5G infrastructure are either American or Chinese. This reliance means that even if Europe has strict rules, the foundational technology and data are still controlled by foreign powers.

• The "Innovation Drag": Europe's focus on a precautionary regulatory framework, while beneficial for privacy, can hinder the speed of innovation for its own startups. The high costs and complexity of complying with a fragmented regulatory environment across 27 member states, coupled with a more conservative venture capital ecosystem, make it difficult for European startups to scale at the pace of their U.S. and Chinese rivals. A 2025 study found that EU tech companies can spend up to 30% of their resources on regulatory compliance, which would otherwise be invested in growth and innovation.

The Geopolitical Stakes of Technological Independence 

In the 21st century, technological independence is a prerequisite for true global influence. A nation's ability to shape the future depends on its capacity to innovate, produce, and control the technologies that power modern society.

• The U.S. Model: Private Sector Dominance: The U.S. uses its digital champions as a key tool of foreign policy and economic power. The private sector, fueled by a powerful venture capital ecosystem, creates companies that dominate global markets in social media, search, cloud computing, and e-commerce. This allows the U.S. to project its economic values and gain a strategic advantage.

• The Chinese Model: State-Driven Supremacy: China's strategy is even more direct. Its state-backed champions, like Huawei and BYD, are instruments of state policy, building a digital infrastructure that promotes China’s geopolitical interests. Through the Digital Silk Road, China is exporting its technological ecosystem and a governance model that is attractive to authoritarian regimes.

Europe, lacking its own counterparts, is caught in the middle of this technological rivalry. It is forced to choose between the U.S. and China for critical infrastructure, which compromises its ambition for "strategic autonomy." Without its own champions, Europe is essentially a large, wealthy market for others' technology, rather than a creator of its own.

The Path Forward: From Regulator to Innovator 

European elites are aware of this challenge and are making concerted efforts to bridge the gap. Initiatives like the EU Chips Act and the European Defence Fund (EDF) are a clear sign of a new, more explicit industrial policy aimed at fostering domestic champions.

• Addressing the Fragmentation Problem: The EU's "Startup and Scaleup Strategy" aims to harmonize regulations and improve access to financing to make Europe a more attractive place to build a business.

• Targeting Strategic Sectors: Europe is focusing on sectors where it has a strong research base, such as deep tech, quantum computing, and green hydrogen, with the goal of creating niche global leaders.

However, these efforts face significant hurdles. The entrenched national interests, cultural aversion to risk, and a more conservative investment culture remain powerful obstacles.

While Europe can and will continue to be a powerful voice on global governance, its influence will remain constrained to regulation unless it can successfully foster its own digital and industrial champions to compete on the world stage.