Referees don’t win games: Europe and the digital great game

The challenge for the EU is to match the innovation levels of the US and China and to defend its interests and principles against the American tech giants

A replica of Sputnik 1, the first artificial satellite in the world to be put into outer space: the replica is stored in the National Air and Space Museum
Image by NSSDC, NASA

Technology not only transforms economies and societies; it is an essential component of state power. This is true today and has been since ancient times – although we sometimes forget it, with dire consequences.

Every empire has been connected to some form of technological superiority. The British Empire was made possible by three innovations: the steamboat, the machine gun, and quinine, a technological trident that allowed a small island in the Atlantic to rule over one-quarter of the Earth’s surface and 458 million people (20 per cent of the global population at that time).

Equally, the technological superiority of the United States has been central to Pax Americana, the key to winning the cold war. China – which wants to regain a leading role in the world and to be respected once more after centuries of isolation, poverty, and foreign domination – has noted that the Soviet Union lost the cold war without being defeated militarily, except in the conflict it fought in Afghanistan.

If there is one thing China’s leaders have been clear on, it is that the process that brought the US to its current position was no accident. It was not Mark Zuckerberg who invented the internet so that we could share photos of family birthdays and saturate social media with videos of kittens, but rather the research initiatives that were launched by President Dwight Eisenhower in response to the Soviet Union’s launch of Sputnik in 1957, a technological success that left the US reeling in shock.

Unknowingly, the US was not only laying the groundwork for victory in the cold war, but also extending its hegemony well into the twenty-first century. Testament to that power is that while in 1990, just before the break-up of the Soviet Union, the five largest companies in the world were American (General Motors, Ford, Exxon, IBM, and General Electric), three decades later, at the end of 2020, the world’s five largest companies by market value are still American firms – although, now, they are all digital enterprises (Apple, Microsoft, Amazon, Google, and Facebook). The US is the first digital empire, with China lagging behind.

From coal to 5G

The geopolitics of the twentieth century focused on control of coal, steel, oil, gas, and maritime routes. In the twenty-first century, the battlefield on which the superpowers stand is digital. We are not only talking about cyber attacks and disinformation – which are the spearhead of hybrid war strategies – but also about a competition for world hegemony between the US and China that will last throughout the twenty-first century and whose result will depend on control over data clouds, semiconductor production, artificial intelligence, 5G and 6G network security, and quantum computing.

Today’s struggle for digital superiority is the new Great Game in which the superpowers confront each other. But, instead of pitting the British Empire and Russia against each other in Central Asia and with Rudyard Kipling as its chief chronicler, we are seeing the Chinese Communist Party unfold a powerful industrial and innovation strategy in a bid to become digitally independent from the US.

It is the twenty-first century, and the actors are Google, Apple, Facebook, Tencent, Alibaba, and Huawei – but the reality is the same as always: conquer or be conquered; be sovereign, a vassal, or a colony (digitally speaking, this time). Hence the importance that the concept of “digital sovereignty” has acquired for the European Union – in a way that was unthinkable in the 1990s, when the EU took for granted that globalisation and the internet would lead humanity towards a new horizon of shared technological progress.

In that happy world after the end of the cold war, amid the triumphant glow of liberal democracy and economic interdependence, geopolitics seemed an outdated discipline. In that world, access to technology was not perceived as a problem – owing to the belief that the combination of open markets, strong multilateral institutions, and effective international standards would guarantee citizens and states that access.

With open supply chains and highly decentralised manufacturing processes, geography counted for little: a smartphone could be conceived in Silicon Valley and assembled in China for sale in Spain, while its components could be made in Taiwan or Vietnam with coltan from the Democratic Republic of the Congo.

Geopolitics strike back

In that world, neither politics nor geography dictated the levels of access to technology. But that world already belongs to yesterday. With the return of history came the return of other forgotten elements of politics, such as identity, geography, and demography. They have brought with them geopolitics and the central role of states, forcing Europeans to seriously consider the risk that they will become digital vassals.

The EU has understood that, in the digital world, you can only choose between being a player or a playing field

The good news is that the EU has understood that, in the digital world, you can only choose between being a player or a playing field. The EU is not a military superpower, but it is a regulatory superpower. Thanks to its very broad competences in trade and competition policy, it has become a powerful digital actor despite having no companies that match their US counterparts in power or size. Equipped with rules such as the General Data Protection Regulation of 2018, or the two proposals the European Commission presented in December to regulate both markets and digital services, the EU is positioning itself to impose its interests and principles on the American tech giants.

Fines for an abuse of market position and the prospect of a digital tax to put a stop to the unseemly tax practices of these large companies are now the order of the day. So are efforts to oblige platforms to take responsibility for the harmful content that users upload onto their networks, and to ensure they respect and pay for copyright, including the news content of other media outlets that they air on their platforms.

At the same time, since the European Commission identified China as a systemic rival and a technological competitor in a bold and novel strategy it approved in 2019, European governments have begun to limit the presence of Chinese companies, including Huawei, in key technology sectors such as 5G.

The EU has also taken a step forward on artificial intelligence, approving a series of strategies and plans that seek to ensure that the development of this technology – whose industrial impact many experts compare with that of electric power in its early days – is carried out in accordance with the values on which the EU is based, especially in terms of data protection.

In the last five years, Europe has become a global pioneer in digital policymaking, abandoning its previous laissez-faire attitude. Covid-19 has only served to highlight the need to go further down this road. But regulating alone is not enough: referees don’t win games. The great challenge for the EU is to innovate as much as the US and China do. That is where its digital sovereignty will be won or lost.

The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of its individual authors.

Author

Head, ECFR Madrid
Senior Policy Fellow

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