Europe finds itself at a technological crossroads, caught between the US-China technological competition. On one hand, Europe is becoming increasingly dependent on American Big Tech companies, whose monopolistic practices undermine European companies. On the other hand, dependence on Chinese technology raises concerns about data privacy and security. For Europe, the protection of data, critical information, and infrastructure is no longer a luxury but a necessity. This led the European Commission to initiate a 300 billion Euro plan in 2021, which later evolved into EuroStack. The plan was to build a tech ecosystem, which would have its independent supply chains, be sustainable, and have connectivity to support emerging technologies. This would allow Europe to chart its independent tech policy in a polarising technoscape free from trade restrictions and supply chain disruptions.
Launched in 2025, the EuroStack initiative is organised in layers that are interconnected with each other. Its foundational layer is Resources, which provide the material for electronic devices, followed by Chips, which are necessary for all modern electronics. These two foundational layers allow the base upon which other layers such as Networks, Internet of Things (IoT), Cloud infrastructure, Software, and Artificial Intelligence are based. Each layer is built upon the previous layer, creating a stack of layers that operate as a single unit. The EuroStack initiative aims to create a complete tech ecosystem, comprising of an independent supply chain from raw materials to the end product.
Although ambitious, the EuroStack initiative is constrained by its structural dependencies and bottlenecks that challenge its overall feasibility. For much of the 21st century, the European tech industry has been dependent on the US. For instance the US companies such as Google, Microsoft, and Amazon hold approximately 72 per cent of the cloud infrastructure market. European companies face unfair trade practices such as egress fees and are subject to controversial laws, such as the Cloud Act. This act grants US the right to access data on any US-based servers for criminal investigation, even if the server is physically located in Europe. This provision conflicts with European data protection laws. For instance, Article 48 of the General Data Protection Regulation clearly stipulates that third-party searches are only valid if they are based on an international agreement, a legal criterion which the Cloud Act does not meet. Server providers are themselves caught in a legal dilemma where they either risk breaching European laws or fail to comply with a US warrant.
European companies are largely dependent on Chinese suppliers for rare earth elements, with China accounting for approximately 70 per cent of rare earth minerals and 90 per cent of processing. This effectively grants China significant leverage over European high-tech industries, which heavily depend upon rare earth minerals for the production of missile systems, satellite communications, and space-related components. This has triggered alarm bells in the European security community, which views China as a geopolitical rival and antithetical to its values of privacy, transparency, and democracy. In particular, Europe apprehensively regards the dual nature of Chinese tech companies. The Chinese National Intelligence Law states that Chinese companies, irrespective of their location, must share intelligence with state agencies without regard to local laws of data privacy. Recently, in May 2025, Chinese companies were fined 600 million pounds by the British government for illegally transferring data to China. These challenges underscored the need for Europe to build its own tech ecosystem in order to guard its national interests and reduce dependence on US and China. If Europe is to embark on this journey, it must forge new alliances in Africa and Asia to gain access to precious rare earth minerals. These materials will be the bedrock on which Europe can build its capacity to produce tech infrastructure and high-tech products.
Apart from supply chain constraints, Europe faces challenges related to low production capacity and low capital mobilization. According to a report, Europe consumes 20 per cent of the global supply of semiconductors while produces only 9 per cent. To enhance the capacity building, Europe needs to invest more in start-up companies. However, Europe has struggled to mobilise capital for its tech companies compared to their Chinese and American counterparts. According to a report by the European Investment Bank, start-up companies that have been operating in Europe for about a decade have received 50 per cent less capital than those in the state of San Francisco alone. Europe needs to invest more in its tech industry to compete. Although necessary, such measures will drastically increase the cost of investment from 300 billion to 5 trillion Euros, making the EuroStack project a massive investment for the continent. These challenges, while daunting, are not outside the realm of possibility for Europe. Europe has a mature and technical industrial base that can produce high-tech products. For example, the Dutch company ASML produces lithography systems that are vital for chip design. Europe also has a vibrant software ecosystem, which includes companies such as Nextcloud, LibreOffice, and Bitdefender, which provide critical digital services. Building EuroStack requires Europe to build its independent supply chain and mobilise capital for start-up companies. If fully realised, EuroStack could establish Europe as the third power after US and China, and mark its territory in the global technoscape.
Syed Ahmed Ali is a research assistant at the Centre for Aerospace and Security Studies (CASS), Islamabad, Pakistan. Â He writes on techno politics and can be reached at [email protected]
