How should Europe build its own Silicon Valley?

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The writer is a fellow at Stanford University’s Institute for Human Centered Artificial Intelligence and the Cyber Policy Center. She is the author of ‘The Tech Coup’

Mario Draghi’s report on EU competitiveness addresses what the Japanese call “the digital deficit” in Europe: the over-dependence on foreign technology. This leaking of money, talent and independence is a strategic, existential problem. The report quickly reignited a debate on the decades-long ambition of removing unnecessary barriers and finally creating a capital markets union. It also urges major investment.

One question remains elusive, however: what kinds of projects should be fostered with the hundreds of billions of euros envisaged, to make the EU a more successful, innovative economy? It would be a missed opportunity to focus on quantity instead of the quality of what digital future Europeans can develop. Rather than trying to copy Silicon Valley, the EU should foster innovative success based on its own values. 

The answer to Europe’s lagging competitiveness does not only lie in smart betting on emerging technology, investment in public digital infrastructure and supporting the creation of a Eurostack — or European alternatives at each layer of the tech stack from artificial intelligence applications to data centres. Beyond removing barriers between member states that hinder scale-ups today, and building the digital foundations of tomorrow, we can draw inspiration from smaller-scale successes that offer unique, values-based examples of European tech ecosystems. 

Mondragon Corporation is a Basque, worker-owned tech association of co-operatives that serves as an attractive alternative to blitzscaling. With more than €11bn in sales last year, its focus on “people in a real, democratic and efficient way” as well as “financial stability and sustainable wellbeing” has proved great for business. Mondragon is one of Spain’s largest corporations. Still, executives never earn more than six times the salary of lowest-paid employees and there are no external shareholders. Staff vote on key decisions, including strategy and salaries. 

Creating an open online sphere and reviving the public remit of public interest organisations in the digital world should be another key objective of European ambitions on digital autonomy. Today, public institutions in the media, culture and education are largely locked into US software contracts while content is shared on commercial social media platforms. The public function of taxpayer-funded institutions remains under pressure while they depend on big tech.

Public Spaces is a coalition of public organisations across Europe — including broadcasters, educational and cultural institutions — that seeks to break this dependence and build more transparent, privacy-protecting digital platforms. Open software allows for governance with a public mission in mind. Public Spaces is one example of how procurement could be leveraged towards outcomes that support democratic, public interest alternatives.

Draghi’s report has sparked fresh debate about the EU’s global position in the technology race. For too long, Europeans have been asking themselves why there is no European equivalent of Silicon Valley. Now they must articulate what success looks like as they build an alternative model. They should switch from the defensive to the offensive, from the reactive to the proactive. After a wave of tech regulations, Draghi rightly points to the need for a renewed impulse through investment and co-operation. 

Done well, unlocking the resources will foster more transparent, accountable, sustainable and democratically governed technologies. Mondragon and Public Spaces give us a hint of what that might look like. If this momentum is squandered, the digital deficit will grow and instead of building alternatives to Silicon Valley, the EU will continue to leak people, profit and power.