Will Europe Become a Digital Colony of the US and China?

The digital world becomes as vital as the physical one for people, companies and countries. Individuals spend almost seven hours per day online in Europe and the US on average, to work, consume and spend, form opinions, have friends, play and be entertained. Countries and companies run infrastructure and processes digitally, wars are fought also online.

In this digital world Europe is so tiny compared to its size in the physical world that it’s hard to wrap your head around it.

Try an analogy: In population size the EU plus UK are ca. 150% of the United States (EU 520 million (UK 69,23, EU 450,9) against the US’ 340 million). Their GDP is still ca. 80% of the US GDP  (Europe’s US$ 23,05 trillion (19,41 trillion (EU), 3,64 (UK)) to the US’ over 29 trillion US$ in 2024).

But online: Imagine all of Europe only as big as France plus Netherlands. There were about 1.200 data centers in Europe in late 2024, but over 5.000 in the US. So, Europe is 25% of the digital “size” of the US. In population equivalent, that would be about 85 million (roughly France plus Netherlands).

In cloud capacity, in 2025 70% of global cloud computing infrastructure was US owned. Much of the rest is Chinese (often dominating in the “Global South”). In Europe, 80% of digital infrastructure depended on foreign companies, mostly US. European providers’ share fell from 27% to 13% between 2017 and 2022.

Social media platforms look even worse. US platforms have over 12 billion users, Chinese over 5 billion, Russian Telegram 0,95 billion. Europe - basically nothing.

And up the supply chain, China controls rare earths crucial for hardware production.

Europeans live and work in a mostly American (and Chinese) online world. Their lives’ infrastructure is owned by foreign companies. Its rules are made not (only) by their elected representatives. Their vitals and metrics, secret habits and wishes, are surveilled, analyzed and categorized with computing power beyond imagination. Algorithms’ unseen biases shape the digital “reality” forming their views. Foreign security structures might access this data. And the power to switch off water, heat, communication, cars, and intelligence tools and weapons supposed to defend you, are ultimately in foreign hands.

Just one example: European youth spend on average around 1 hour per day on Chinese TikTok. TikTok users are more likely to see Russia’s Ukraine invasion less critically, find China’s political system has merits compared to democracies, and doubt climate change, a study in Germany recently showed. And recently 21% of young Germans voted for the right-wing Alternative for Germany party, which has exactly these positions and is outdoing the traditional parties on TikTok. Or – a crasser but still murky case – look at Romania’s manipulated and then annulled first round of presidential elections.

Is Europe becoming a data colony? European “digital sovereignty” – or the lack of it – has been a big topic for years in the EU. President of the EU Ursula von der Leyen has declared it a priority – as a candidate in 2019, in her first term, and in her second term.

But while in military hardware, European countries might have started, under the impression of Russia’s attack on Ukraine and recent changes in US policy, catching up – in terms of digital hardware and platforms it looks bad.

EU politicians with justified pride present AI unicorns as Germany’s defense sector specialized Helsing or France’s Mistral. European tech companies attracted about US$ 426 billion in venture capital 2015-2025, ten times more than the previous decade. French OVH has 3% of global market share in cloud computing, German Stackit builds an open-source, EU located cloud service: "for an independent Europe – digital, leading", and there are many more examples.

But while going in the right direction, one cannot shake the perception that the EU does not really get there.

Former Italian MP Mario Draghi in his report on EU competitiveness named key reasons: The EU Single Market and Europe’s capital markets are not integrated but fragmented

In defense, government budgets make the difference. More government spending means more military hardware. But digital dominance is shaped by private companies. Each of these companies needs billions from private or institutional investors. In Europe’s fragmented markets, they cannot get that kind of money. It is also so that EU institutional investors are reluctant to provide venture capital.  No government budget offsets that.

Therefore, the new companies building the digital world don’t develop in Europe. To scale up, they go to the US. Europe has more early startups than other regions. But 60% of global scale-ups happen in the US, 8% in the EU.  US venture capital funds raised seven times more than European ones 2013-2023 (US$ 924 vs. 130 billion). 

This is why the six biggest US companies are relatively recently founded big tech companies (Microsoft, Apple, Nvidia, Amazon, Alphabet, Meta). In Europe four out of the top six are much older. As Draghi stressed in his report, just 4 of 50 top global tech firms are European.

Draghi called out in exasperation to the European Parliament in early 2025 that if Europeans refuse deep, structural changes, the digital future, and therefore all the  future, is very bleak: “You say no to public debt. You say no to the single market. You say no to create a capital market union. You can't say no to everything... If you ask me what's best to do…I have no idea, but do something!”

EU policies to boost innovation investment do. But somehow, the innovation Council, innovation Compass, “flagship actions” within “pillars”, to be translated into “concrete measures”, including “the so-called ‘28^th regime’” reported in the EU web presence “Towards an EU Startup and Scaleup Strategy” don’t evoke disruption. More a Brussels functionary with grey-streaked hair and a silk scarf trying Parkour and not really getting up the wall.

Meanwhile, US President Trump hustles and bustles to even further increase investment in the US digital sector. Last week, on his first foreign trip, US companies concluded investment partnerships with Saudi Arabia including tens of billions of investment in AI, among others in building 500 megawatts of AI infrastructure in Saudi Arabia and investing Saudi US$ 20 billion in US based data centers. The official fact sheet on the Saudi partnerships references President Trump’s America First Investment Policy.

The second issue is regulation.

On the one hand, the EU’s regulatory power is a great asset to be a digital player. The attraction of its huge market allows the EU enforcing rules even on US tech giants. Its General Data Protection Regulation (GDPR), the Digital Services Act (to fight illegal content), the Artificial Intelligence Act (risk-managing AI) attempt a balance between innovation and protecting users’ rights as well as managing risks of new technologies.

But regulation’s downside is seen by Europeans, too. Again, Mario Draghi in 2025: “The GDPR is estimated to have increased the costs of data by 20% for EU companies.”

And regulation does not create competitive online products. Draghi said the EU’s regulation had “prioritised precaution over innovation, especially in the digital sector.”

Meanwhile, the US, fundamentally less regulated, deregulates further under President Donald Trump. Vice-President Vance told Europeans recently that the AI future would not be “won by hand-wringing about safety.”

Finally, there is the mindset. The EU stigmatization of failure (other than the US) is not great for startups. Entrepreneurial Europeans often go to the US – a vicious circle.

In today’s global digital reality, as described by political scientist Ian Bremmer, Europe plays at best a minuscule role. Bremmer describes a “bifurcated” world, “pitting a technopolar United States, where private tech actors increasingly shape national policy, against a statist China, where the government has asserted total control over its digital space.” He says, “the question is (…)  whether open societies can survive the challenge.” His article mentions Europe only for having tried to create ambitious legislation.

Will the EU overcome this? It’s not only that decision-making of 27 with different interests makes the EU slow, while in the digital world speed is a vital quality in itself. Also, the EU wants to do all at once: digital transformation but with green energy, and protecting privacy and managing risks of new technology. Emmanuel Macron’s AI Summit’s statement was titled “Inclusive and Sustainable Artificial Intelligence for People and the Planet.” Those European politicians who question extreme capitalism might find fault with the business model at the heart of the world’s leading digital companies: harvesting and commercializing users’ data.

This is all good and important. If it worked, ‘the European model‘ would be extremely attractive. But users seem to often choose products that are quick and slick. Companies that focus solely on profit seem to be doing ok. And countries with little regulation, too. Maybe even the EU’s non-imperialist character is not a natural friend to digital disruption. Zurich professor Roland Meyer points out that Open AI’s and others’ approach to  AI “follows the logic of a boundless expansion” –  and sees a logical fit with the US leadership’s approach to global geopolitics.

Also, authoritarianism and brutal digital commercialism seem to go together well, as for example the example of China shows. The Great Firewall to quash dissent online coexists with China’s digital startups disrupting economies worldwide by being cheaper, quicker, shinier, more consumerist than anyone on the globe.

What will be the EU’s position in the digital world in 2035? Let’s ask experts from the US, China and Europe: Chat GPT, DeepSeek and Le Chat by French AI company Mistral:

Chat GPT’s says “Europe is likely to remain a regulatory superpower but lag behind the US and China in tech dominance.” DeepSeek agrees: Europe can remain a “regulatory leader and a hub for ethical, industrial and specialized digital technologies – but without matching the (…) U.S. (…) or China.” Deep Seek adds Europe could be “the ‘Switzerland of AI’ – trusted, neutral and high quality.” And like Switzerland really very, very small compared to China, and not pushing for its values abroad, one could read between the lines of Chinese professor 探索未至之境/DeepSeek’s analysis.... Mistral’s Le Chat is more self-confident, attesting Europe a “competitive edge” that it needs to “maintain.” Le Chat is also less willing to risk a clear prediction: “By 2035 Europe’s position in the digital world will depend on its ability to innovate, invest in digital infrastructure and navigate the complex relationships with the US and China.” Isn’t this an elegant very European wording?

For the human author of this text, the situation looks more dramatic. Global digital innovation really does create a whole new world – much of it not necessarily only useful or good. Meanwhile the EU is making progress in the perspective teachers tell a struggling child: “Don’t compare yourself to others, compare yourself to where you were yesterday.” But as Jean Paul Sartre said about soccer, it would be a great game if not for the presence of the other team. And in the digital world, the other team is very much there. It even builds a new soccer field.

I personally would like to live in an EU whose citizens can chose to not be data-harvested in exchange for using digital extension tools for their brains and AI-curated shopping and entertainment. I believe, only Europe can provide such a perspective. I also believe that if a digital disaster with AI run wild happens, the EU approach be in demand. But for the moment no AI disaster has happened. For the moment, tech companies outside of Europe change the world, growing at unbelievable speed.

To choose to refuse something, one must be enough competitive to have a choice.

Mario Draghi’s policy proposal of single market, single capital market and EU public debt for strategic innovation investment shows a way forward. But will EU do it? We saw in defense how the EU and its member states are great at doing too little of the right thing. And while EU investments in digital infrastructure, or defense investments going to digital companies, or EU regulators legal actions, or US lawsuits against tech giants threatening their break-up might improve the position of digital Europe, it will probably not cause a fundamental change.

But maybe US President Donald Trump can get things moving. In the physical world he managed: Europeans started taking defense in their own hands when President Trump made clear he might withdraw US protection.

The US push for deregulation aims at clearing the way for US companies, and keep unrestricted the free expression of opinion online as the US leadership define it. But a regulatory compromise of the EU with the US administration could improve innovation leeway for European companies, too. At the same time, some say growing insecurity for companies in the US because of unpredictable economic policy making could motivate businesses and investors and tech talent to consider Europe more favorably.

That, and the EU could learn from the mindset of Central and Eastern Europeans in digitalization. Think Estonia and Ukraine. People say, we should have listened to them on Ukraine, on Russia. Consider listening to them on digitalization.

To end with an encouraging example: Look at STALKER 2, the Ukrainian sequel to the successful STALKER game by GSC Game World. The digital gaming globe is serious. An estimated 3,2 billion people play online games. On this digital globe, the makers of STALKER 2 created a wild and beautiful place full of Ukrainian history merged with global references and boundless imagination. Until now, 6 million people bought it – chose to live in this country on the digital globe. There are no limits in the digital world, and things don’t take long. If you offer what people want, they can be with you in a heartbeat.