“The US innovates, China replicates, Europe regulates” is how critics summarize the continent’s approach to innovation. Exhibit A of the European Union’s regulatory overreach is the now infamous Artificial Intelligence Act, which governs AI—even though the region has not yet produced a single major player.
Productivity in US technology firms has surged nearly 40 percent since 2005 while stagnating among European companies. US research and development spending as a share of sales is more than double what it is in Europe. No European company ranks among the 10 largest tech companies by market share.
Yet reality, as usual, is more nuanced, according to Alessandro Merli, an associate fellow at the Johns Hopkins University School of Advanced International Studies Europe, writing in F&D.
Europe’s innovation scene holds life in various shapes and sizes. Many of its tech companies are now global household names: Spotify and the buy now, pay later fintech Klarna, from Sweden, and the British digital bank Revolut. Skype, which owner Microsoft recently retired, was founded in London by four Estonians, a Dane, and a Swede. One of its first employees, Estonian Taavet Hinrikus, cofounded Wise, a money transfer company.
“For the first time, the EU Commission has a commissioner dedicated only to start-ups, research, and innovation,” says Francesco Cerruti, director general of Italian Tech Alliance. “But there is a need for translating words into action. And fast.”
