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upstart writes:

On tech, the EU doesn't speak for Europe:

The European Commission of President Ursula von der Leyen vowed in 2019 to make "a Europe fit for the digital age," dubbing the 2020s Europe's "digital decade."

Building on the European Union's flagship privacy law, the General Data Protection Regulation (GDPR), Brussels's regulatory race to the top gained historic momentum over the past four years. And from digital markets to content moderation, artificial intelligence, cybersecurity, computer chips and data governance, the Commission has left little on the table in terms of regulation.

Bolstered by mended ties with the administration of United States President Joe Biden and increased coordination with the U.S. through the Trade and Technology Council (TTC), the von der Leyen Commission seems to have achieved the impossible in an often rancorous 27-member bloc — a unified Europe around a common digital agenda.

But this narrative of unity obfuscates a much more complex reality in which the Commission's policies are dominated by its two largest — and most zealously regulatory — countries: France and Germany. In fact, Europe's smaller but most tech-oriented members rarely feel heard in the halls of Brussels, even as they often disagree with the Commission's agenda.

Privately, officials from these countries say the Commission's strategy will hamper innovation by imposing complex compliance rules on smaller companies that can't afford to implement them. They also worry that foreign investment — particularly from U.S. investors, which are responsible for a whopping 76 percent of foreign investment in European tech companies — will wane as the Commission goes after large American tech firms. And many lament that Brexit took away the United Kingdom's counterbalancing voice, leaving a vacuum for France and Germany to fill.

While these concerns are rarely aired publicly, simply put, Central and Northern Europe know that when it comes to tech, the EU doesn't speak for Europe.

And no wonder: None of the EU's major institutions — the Commission, the European Council or the European Parliament — have Central Europeans at the helm, even as the power balance in Europe shifts eastward after Russia's invasion of Ukraine. Proportional representation in the Parliament also means that the largest countries — France, Germany and Italy — have the most power in terms of votes. Even if all the Nordic, Baltic and Central European countries voted as a block — which they don't — they would still have fewer votes (191) than just France, Germany and Italy (251).

As a result, smaller countries then need to prioritize focusing on the most critical issues — defense and security — and the Parliament's ability to set Europe's tech agenda is then hamstrung by the Commission's sole power to propose legislation.

But just as the power balance on defense and deterrence is shifting to the east and north, so are the economic headwinds when it comes to tech innovation and investment.

For example, Helsinki, Stockholm and Tallinn have higher growth rates for capital invested in startups than London, Munich and Paris. And while unicorns — or firms valued at $1 billion or more and are still predominantly privately owned — in Western Europe still raise nearly double the amount of money as those in "new Europe," the latter has the highest valuation-to-investment ratio on the Continent.

In short, tech companies in Central and Eastern Europe do more with less.

Original Submission