You would be forgiven for thinking that Europe has missed tech. As the US and China become global tech powerhouses, it’s easy to think that Europe is simply waving from the shoreline as the tech boat sails away.

However, there's another way to look at this. Instead of dominating it’s specialising. From pioneering commercial computing to building systems for complexity, regulation, and the physical world, Europe builds the tech that societies run on

Also in this episode: We’ll explore where Europe can truly lead over the next five years, and bring some clarity to the blurry lines of digital sovereignty across the continent.

What to look forward to:

00:37 Why Europe hasn’t missed tech

10:00 Where can Europe lead in tech over the next five years?

20:57 What does digital sovereignty mean across the continent?

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Paul Maher

Jonathan Simnett

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So Paul, what have we got coming up today?

But we do continue to dominate categories. Those categories where complexity, where regulation and physical systems matter.

We, uh, have kept our specialism and our specialist manufacturing, even as others lost out. And, you know, as globalization kicked in, particularly in markets like microprocesses, in phone, handsets and laterally, uh, sadly in cars, the fact is engineers like to sit close to the action. They like to be close to the factories.

So broadly in this case, we can think about it in this way, I guess the, the US optimized for abstraction speed, uh, China optimized for scale. Um, and Europe optimized for precision.

Uh, regulation can often create. Or at least shape markets often. Um, you know, remember the best solutions can often come when there are restraints, uh, that are driving the design here. If we look at things like, you know, arguably carbon pricing, uh, grid rules, uh, emission targets, um, they all. Are constraints that demand innovation?

Um, remember British Vault, uh, $3.8 billion Giga plant. Plan. Of course, every politician, uh, in the country wanted to be associated with that. However, when it flipped and the job losses, um, were described in Te Crunch as, uh, as following British false bankruptcy is the death now for the UK's battery industry.

Uh, does neither Its arrive late and it's paying the price.

You're right.

And it, in this case, uh, it is regulation, but it's. Deregulation, um, you know, a, a a, a form of reducing the amount of regulation, keeping it, they were de taking it down, which has helped, um, deregulation. Um, which unfortunately I think will agree is outta fashion in Europe right now. Uh, can be a powerful play.

So it's dealt already with the complexity by default.

It's spawned it concept management, identity verification, compliance, tooling. All became products.

Then regulation in China, though funnily enough. Um, maybe not. So, uh, funny, uh, privacy is not their priority.

Pretty strong stance taken during the development of GDPR.

Software integration collide what they call it, ot.

That's, that's gold for MedTech.

So I've been thinking a little bit recently about where Europe can lead in tech over the next five years, and what categories might it dominate. We think we know where Europe has been, but if Europe's gonna lead in the next wave of tech, we can be pretty much certain. It's not gonna be by out scaling the US on foundation models or the Chinese are making lots of things.

With a version of regulated ai.

Uh, sovereignty Fund has focused on defense. Um, as we've said before, the eu, um, the EU AI Act and the much delayed, probably never gonna happen. UK AI Act scares startups, but it could also be seen as a bit of a moat. Um, maybe has the same pattern as GDPR, where Europe sets the rules for the, for the world and everyone, everyone else that fancies, you know, access to half a billion reasonably well off.

Customers ends up complying. And so over time, quality of product increases.

Um. Controversially Palantir, um, has just gained access to the NHS and public sector, and I know from anecdotally from people I've been speaking to quite senior positions in the NHS, certain of the unions there are not allowing their workers to access systems. They believe Palantir's behind.

Uh, China has the scale. Europe has the integration.

How do we make sense of, of a vast, uh, emerging category.

Not a startup experiment,

Uh, but because these, um. These early or, or more fundamental basic science projects are slow to market and they're research heavy, you know, they don't get the spotlight. Uh, and that's helpful for, um, you know, aggressive nation states. There are persistent rumors of, of, uh, espionage by, um, Chinese students and others, uh, around these cutting edge technologies.

Uh, graphene famously invented in. Uh, university of Manchester or, or, or both of our alma masters. And it was, uh, it's disappointing for instance, um, to see the UK's only recently admitted, uh, that this was an issue. An MI five, um, just very recently has briefed or universities that. Maybe there's some espionage going on.

And we know this from our work with, um, the secure communications. Firm element. And they have built on the Matrix standard, which is a global open standard that is adopted now by, uh, several, uh, armed forces across Europe. And of course, Mr. Ms. Y Macron has recently talked, uh, about, um, using exactly this tech.

We hope. Uh, sovereign capabilities, um, you know, ai, na native compute for research and industry purpose-built infrastructure early days, but we'll see, not mass market. Sell as much as you can. Pile 'em high, sell 'em cheap cloud infrastructure, or should I say pile 'em high, sell 'em cheap until you have a captive market.

And then. Ramp your cross up. Um, this is a different game that Europe's playing.

We talked about that previously. Uh, the US. Uh, obviously, uh, spends the most on healthcare with arguably less good results, but it also leads very much on the investment on the capital markets. Europe leads on, um, validation of, uh, innovation of, of solutions and deployment.

It's really hard to copy.

Um, there's some pretty, uh, long running and deep data records in the UK's NHS, possibly the best in the world. Um. And so, yeah, maybe more positively if we can get to grips with that issue. We can look at autonomy and robotics, not consumer robots infrastructure, you know, B2B robots.

We've seen some early startups there. You know, defense ports, different systems that must operate. Again, Europe's really good at this safely. In the real world. Yeah.

We can dominate in the, uh, less glamorous, if you will, fundamental systems that economies rely on. And we do need to be aware of the creeping threat of what is now at least it looks like a perceiving, a seemingly less friendly US regime in power.

Very old school. Not at all. Shouty, very European.

Shows, so pardon our French, which frankly for us is usually a euphemism for swearing. But what's fascinating right now in Europe is how everyone keeps going on about digital sovereignty. But when you look closely, they mean wildly different things. By that term.

Uh, it's not surprisingly given our cultural and industrial history, which we should be reasonably proud of, that the UK and France are almost textbook opposites. They share anxiety about, uh, foreigners, but mainly, uh, us. Uh, folks, uh, they, they, you know, we've all watched the tech dominance of the us but we've got totally different responses.

Now, for those of you not familiar with England in particular. Um, in South Yorkshire is a town called Barnsley.

Barnsley is famous for three things by, by my reckoning, um, professionally being in Yorkshire, uh, a former mining center, and the birthplace of iconic Chacho host Michael Parkinson. Anyway, Barnsley has become the first of the UK's. Tech towns, um, uh, 40 years too late in our opinion. But, um, this is a classic piece of British pragmatism.

Adobe a push. These are all the us uh, hyperscalers, uh, and they're all deeply embedded already despite efforts to remove them. Um, we've talked before about Macron trying now, um, into UK government. Um, and so the UK's, again, pragmatically taking investment directly from the SA, um, most recently with a 31 billion US UK tech prosperity deal.

Is that real? Um, which is actually integrating. All of this infrastructure, infrastructure more heavily, uh, into our, um, government and, and our, our society, hopefully, uh, to produce some benefits.

State benefits dependent. Um, you know, it's gonna be a kickstart that includes free digital training for residents, AI adoption for local businesses, imagined productivity gains in healthcare and education. I mean, it's, it's very outcomes and, and frankly, party politically led.

It's more about capability than control. Um, if communities or workers. Are taught or know how to use ai, then the councils can de deploy it effectively. Uh, and if not, they can't. Um, just this week I was speaking to, uh, one of, uh, our largest vendors, uh, and having a conversation where somebody spent literally an hour teaching me how to use a quite obscure set of controls in their software.

Uh, and it would become very outcomes. Um, and maybe party politically led.

And let's not forget La Concord.

Um, we've seen a bunch of this stuff. You know, they, they do have, um, their own data centers that can run ai. Um, without their, to their data ever touching us owned carriers originally, maybe for GDPR, but certainly, uh, it's now looking like a smart move. And so, um, they're avoiding the entire set of regulations that is the, you know, land grab called the US Cloud Act,

The US worries about falling behind France, worries about losing control, and because of this, they're optimizing for different futures,

Uh, in if it wanted to in any case.

I'm sure they could do a lot better if they get this right. Uh, there's a subtext here of, uh, surveillance and resilience. Um. We also recently the US Cloud outages, uh, last year. And suddenly then sovereignty becomes a lot less abstract. It's about what happens if the service just. Is not there anymore.

I'm still unsure why the Chinese folks are helping us build a nuclear reactor.

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