Europe invests heavily in research, publishes and patents many ideas. But it doesn’t compete with the US and China when it comes to translating innovation efforts into large, global technology firms. The seven largest US technology firms, Alphabet (Google), Amazon, Apple, Meta, Microsoft, Nvidia and Tesla, are 20 times greater than the seven largest in the EU and generate greater than ten times more revenue.
This doesn’t mean that Europe doesn’t have technology success stories. The world leader in music streaming is Spotify, a Swedish company. The Dutch company ASML produces the most advanced in the world computer chips and Danish drugmaker Novo Nordisk leader an especially profitable marketplace for weight reduction drugs.
European start-ups are also really: higher arrangement for enterprise capitalists than the American ones. However, they rarely grow to be significant global players. The principal reason is that Europe regulates more.
Studies have shown that Europeans do less optimistic than Americans in terms of social mobility, they need redistribute income greater than in the US and are more cautious of their relations owning dangerous assets. This leads to some very predictable results. Indicators related to the environment, inequality and life expectancy perform higher in Europe, while purely economic indicators perform higher in the US.
This is not necessarily bad news. In the competition to define the rules of the technology game, the combination of America’s vast tech ecosystem and Europe’s obsession with regulation could also be the best chance to protect consumers, free speech, accountability and transparency around the world.
symbiote/Shutterstock
World leader in regulation
The US Food and Drug Administration (FDA) does accelerate faster approving latest medicines than the European Medicines Agency. Pharmaceutical firms even have greater profits: on average, there are greater than thrice costlier than in the rest of the OECD.
Therefore, it is sensible for pharmaceutical firms to develop their products in the US first. The same applies in the event you want to develop a latest synthetic meat, modified crop, or artificial intelligence (AI)-related product.
Europe could grow faster by changing its model. But ask European leaders what specific regulations they’re willing to chill out and you may hear deafening silence.
The UK is probably the best illustration of this. A big part of the Brexit project was to simplify European rules, which were considered excessive. However, eight years after the referendum, the UK has yet to make any major regulatory or government changes shows no interest when changing the beat.
In the US, innovation goes hand in hand market concentration and market power. When firms have high market power, they could have less incentive to innovate. They are also starting to gain political power.
Images Tada/Shutterstock
This is where Europe’s role as an independent regulator may be very vital. The largest firms they typically respect EU law because they need to maintain access to the EU. They also tend to offer the same products throughout the world, which implies that European regulations apply to everyone.
European rules have clear objectives. EU Digital Markets ActWhich comes into force in March 2024, it establishes laws and rules for giant online platforms – the so-called “guards” similar to Google, Amazon or Meta – to prevent them from abusing their market power.
Europe can also be credible when it comes to protecting consumers, residents and transparency. It can’t be suspected of favoring European technological champions, because there are none. Europe can e.g. Tiktok judge based on whether it violates child protection laws, reasonably than on fears that a Chinese company will take market share from a European company.
Technology and democracy
Perhaps the best example of the advantages of old regulation in Europe and a liberated America is the current race for artificial intelligence. The United States is a market leader in artificial intelligence technology that may power products and applications similar to image generators, voice assistants and search engines like google and yahoo. About half of the world’s investment in artificial intelligence is currently happening in the USA.
At the same time, Europe has already taken several steps to introduce regulations. EU Artificial Intelligence Actdefines e.g different levels transparency and auditing of algorithms depending on how dangerous they could grow to be.
Europe will definitely not win the global AI innovation race. But he has a chance write global rules according to your personal values. This means it could hold firms accountable for the performance of their AI tools and ensure transparency of the data used to train them. This also means it might require an audit of the company’s AI algorithms.
Ascannio/Shutterstock
However, for the EU to write latest rules on artificial intelligence, Western firms must win the innovation race. The principal competitor is China, where firms gain mass access to government data, including facial recognition. The Chinese government largely can select your champions by deciding who gets access to the data.
China’s concerns about regulation couldn’t be farther from Europe’s. China shouldn’t be inquisitive about improving transparency and fair political competition – it wants to use data to promote policy Communist Party of Chinaand discipline and support for the national economy.
Far from competing between Europe and the United States for technological supremacy, Western democracies should see their different approaches as a unique opportunity to promote shared values. In this context, the lack of large, global European technology leaders may very well be a blessing.
