In this episode, we’re joined by Cristina Caffarra, one of Europe’s most respected voices on competition, regulation and the digital economy, to unpack what European tech really needs to succeed. A leading economist educated at the University of Oxford, Cristina brings decades of experience advising companies and governments across Europe. She previously led the European competition practice at a top global consultancy and has been at the centre of many of the debates shaping today’s tech policy. More recently, she is the prominent voice behind EuroStack, an initiative advocating for a more competitive and resilient European digital ecosystem - challenging Europe to think bigger about its technological future.

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Paul Maher

Jonathan Simnett

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Been building over the last year an organization called Euro Stack, which is dedicated to galvanizing Europe's tech leaders to start building genuine European infrastructure. So sit down, grab a drink, grab your foibles and Blist to Christina Ka.

Against Microsoft, in which cases I was actually involved on the defendant side because at the time as a consultant, those were my clients. So this is to say that I'm being very deep in the tent of antitrust regulation, uh, but also worked for, um. Some of the biggest platforms. So I have, I think, uh, a vision of, uh, the business model, uh, in various cases and the importance to think about things in business model terms, which is the thread that goes into, into Euro Stack, as I'll explain in a moment.

But when you look at what matters, which is outcomes, did this shift anything on the ground as to No, because the result of all these cases has been absolutely no change on the ground. These companies are bigger than ever with market caps that are bigger than Canada. The reality is that antitrust achieve nothing.

Then you've had in Europe a pivot towards regulation. So instead of saying to companies, don't, you know you've done this bad stuff, we'll now try and correct you delay and late and so on. We'll try and tell you exactly what you shouldn't do again, and for reasons that we can indulge in if you have time.

Holds them back in any way. If you add to that delays and the fact that they have infinite resources to defend themselves and to do soft compliance, this stuff isn't working.

Don't. Is there a sense in which. Uh, European innovation has suffered whilst the other guys have got so successful. How do you feel innovation, uh, in Europe is seen on the tech side by all the other people you work with?

Uh, there, there is a big narrative in the, in the, in the, uh, Trump administration right now, which is the result of very successful lobbying by these companies who've been capable of weaponizing the White House. And the narrative is Europeans are targeting us. Because they don't have any successful funds of their own.

This is effectively a form of discrimination and extraction, a taxation. And we, uh, should resist it at all cost to which you get the feeble European response that says, no, but we will enforce, we'll continue to enforce. Rule of law. Rule of law. This is our institutional, right? All of these people set of answers.

Yeah, please.

Advertise that we as Europeans, were regulating big tech with bicep emojis, all sorts of nonsense on a social media by our regulators. What is absolutely clear is that not only have we failed to control Google Search and Apple Up stores and Amazon e-Commerce, all of these app and services, but the entire infrastructure on which this operates.

The question for Europe is what will we do that allows us to build now? Have DMA and DSA prevented Europeans from building? No. They've only come into into forests three years ago, and it's not what has prevented Europeans from building. They have sought to tame the giants, but Europeans are not in that league.

They have been. Giving European companies some hope that they could possibly, uh, benefit from these laws by giving them an opportunity. But again, they're completely ineffectual, so there is no upside.

The two shall not meet, we're talking about. Regulating them. I mean, you, Bri, lemme tell you a story. You understand the, the novel Goldman Gas, or at least you will have heard it.

This, this, this mythical castle in a mythical place, inhabited by his lordship and his ladyship, very eccentric. Um, just carried on. And then they were at the bottom of the castle on the ramparts, these, uh, kind of peasants. They were known as the wood cupboard. And they were scratching at the door of the castle and kept saying, let us in.

We, we think about software, uh, you know, the way Jonathan and I think about it is categories. You win, uh, a category, then you win a market afterwards. Do you feel with those guys, uh, you know, loan people in where they want, and mostly, as you said, it's ineffectual of this regulation. Let's talk about the bit that.

We should focus on, I think from your, from your narrative, which is European innovation, how do you think those guys and the world. Views European innovation, a second rate?

This is well known to all. The problem we have in Europe is the stuff that is invented and created at the level of prototypes of ideas. Startups don't stand, don't stay. This is, you know, the diagnosis is known to my cat. They, they don't, they don't, uh, stay and they don't scale. Why not? And again, we can describe the diagnosis again, we heard it a hundred times because there is no capital markets union because there isn't enough risk capital, because there are barriers to entry.

Uh, or to expansion across member state. We know that the issue with Europe is not lack of innovation. The innovation is there. It is lack of opportunities to actually fund it and, uh, fund the growth. The startup growth and the scale up.

Uh, great prototypes and innovations into becoming global category leaders. It seems like the problem is almost at the imagination level or the narrative level, not just, um, you know, the, the regulation level.

I mean, there is no question that these barriers are real. I mean that lack of funding and, uh, the fact that there exists, the barriers, we are a fragmented market, which is not essentially pulling its weight, are absolutely facts. And, uh, the, the fact that our, uh, I mean the paradox is that Europe is an incredibly rich continent and one which saves.

Euros stack is not about in some way demonizing or, or guilting the Americans for doing exactly what they should be doing. I was there when Amazon entered Europe. They established, uh, a headquarters in, in, in Germany, and then the instruction from Seattle was just rural France, Italy, Germany, Spain, uh, uk.

And they did. They created an incredibly efficient logistics structure which killed effectively the Belgium Post, the French post, the Spanish post, and so on. Is it their fault?

They had the opportunity to do something for a very long time and they did nothing, uh, other than than shower money, helicopter style in random, uh, things that didn't really achieve anything. So Euro stack. Stack, of course refers to the value chain. We are thinking about everything from chips to apps. Uh, it's not just cloud, although cloud is an important component of this.

To remotely design the future of the European industry, uh, it is something they're not equipped for. You need business people and tech people to actually lead the way. So my position in Euros stack is that we want to get away as much as possible from a notion that the bureaucrats and the institution need to lead.

Squirrels make a lot of noise and run around and don't do very much, but we've allowed the conversation because they've got nothing to do all day. This. At home in elasticated pants and slippers, they kind of write white papers that then occupy the conversation. They have no idea about how business works, and they write things on word salads, like distributed governance, and you know.

This stuff that everyone in business kind of completely walks away from. Yeah.

Paper or white paper, there is only now one message that everyone needs to hear. We need to use brute force and build, build like crazy. The only sensible thing that V the line in Brussels could do today is do what actually the White House tends to do when there is any sort of issue at stake, gather the CEOs in a room and say, here's a bag with 300 billion.

Yeah. I like that. You are probably not a big fan of EU Inc. And the

They know the civil society parasites I have in mind are those who go along and talk about democracy and values, all of that stuff. That is completely turning off business more than this.

Parasite,

Um, but you know, you've got. This organization, you've got the, uh, the CEOs of the tech companies. How does it move forward? What does it actually do to change the status quo?

Um, but, uh, it was remarkable of just come back from Davo that Euros stack had an enormous re name recognition with a lot of people out there, even if they, you know, and you mentioned Euros stack. It was immediately known. They didn't know the full story or the background or the actual mission, but the name certainly is called the imagination.

At the same time, you know, I'm not a lobbyist and I don't want to do a lobbying institution. I will never be a lobbyist. I have a career as an expert in the past, I don't do it anymore, but I will never turn into a lobbyist because that's the second worst category of people after the swirls. So I'm not a lobbyist.

And I want to be able to say, I'm your agent. I'm not your lobbyist. You off your walk. Um, the, the, the intention, however, practically what can we practically do is to really motivate demand to essentially. Put the money where the mouth is, as you just said, we are not gonna move the dial just with conversation and with great awareness of the problem.

When you talk to any business, they say, listen, I don't necessarily need subsidies. Subsidies. Give me the wrong incentives. I need to have. Some form of guarantee of demand. If I can sell my product, I can then go borrow money. I can find the money somehow if I have a certain measure of guarantee that my product will sell.

So. There are two portions to demand. One is public demand and one is private demand, public demand, public sector. It is completely insane that we continue to speak to the European Commission on teams that I continue to speak to German government on. Teams. Are we saying there is no collaboration software made in Europe?

And, and just specifically on teams, 'cause it's one of the worst products I think it's ever been inflicted on, uh, mankind. Um, and it started off good, but it ended up terrible. Um, yeah, there is an alternative. There's a, there's a, right here in the uk uh, there, there's a secure alternative called Element used by NATO and the, uh, Ukrainian Army amongst others.

Very secure. Don't, and open source. It doesn't require teams. But this, I think you put your finger on the problem. We, uh, just recorded actually a podcast on this Alva, Jonathan, like what Microsoft has got is the distribution. What you are talking about is. You know, interjecting and disrupting the distribution by creating demand at the government level.

I gave a, uh, keynote, uh, a few months back to. Digit Digit is the unit, the directorate inside the European Commission that procures digital services for the entirety of the commission. There were 400 software engineers in the room from every corner of the commission. And after my talk, I said, so what you guys do well to a man, they bought Microsoft and AWS.

And I was saying, why is that? Why is that? And the answer truly was. Shrugged and then say, well, you know, it's so easy. They make it so easy. It's plug and play. I don't have to worry about anything. I can smoke a cigarette and go to lunch. This was the literal answer.

And the old phrase used to be, nobody ever got fired for buying IBM. And that continues.

I'm not saying a hundred percent, but can we have 30 40% of our own demand Please. Thank you. So that's, that's the public sector. And this is something which is being sort of taken forward by the change in the procurement directive in the uk in, in, in Europe. I mean, UK is a different story, but in Europe at least, there is a procurement directive, which is due to be signed, uh, this year.

And there's a big debate over this European preference.

And in the case of Hussein is he has a nice exit so he can build something who have a chance to cook and build amazing new categories, which can go on and, and fight the case in the market. But you have to remember about people, like you mentioned, no subsidies. But people like Elon Musk's, um, move on, uh, certainly on Tesla was largely funded, if I remember correctly, by the Biden government and maybe even before that, um, with, you know, compensation to build EVs, um, you know, that were funded by sexually tax cuts.

The European Commission does something we need to break out of that mold because we know that the European Commission cannot, will not do anything useful. So if you ask me, would it be lovely to have the Department of Defense or anyone else? To invest a ton of money in tech, yes, it would, but it won't really happen on the part of the European Commission in a use useful way.

But lemme go on to the other thing. You're talking about young entrepreneurs, and this is an important, an important consideration. I talked to you about the public demand. 80% of the demand is the private demand. Now there lies that the problem because private demand, you cannot mandate it. You cannot tell a private company do go and buy European supplies.

Lag because ultimately we'll kick the commission and the governments into doing the right thing. The private sector doesn't walk the walk yet. They talk the talk, but they don't walk the walk. And because of of that, they're risk averse. They have other priorities. So if you look at the large enterprises, even at the medium enterprises in Europe, they're all totally embed with Microsoft and AWS.

And, uh, in the current climate, we want it to be entirely in the hands of American, American companies. We want to shift, uh, from American companies, at least in part for our loads. We do AI training. Um. Into European supplies, what have you got? And then you turn around and say, what has Europe got? Which is actually a one for one replacement of what the Americans have.

Dozens of le different levels of sophistication. We have terrific software. Europe, of course, because of open source is the magician of, uh, software. We have tremendous software and then we have some AI applications that are also, uh, very specific and sophisticated. However, if you go back to a large industrial customer and say, ha, look at this, I've got a lovely set.

Things for you to choose from. The answer is Uhuh. I'm not gonna sit here stitching together bits and pieces into a an end-to-end offering. You need to just put it together so the companies go back. And what we did was put together four different collaborations. So this one with this cloud and this software, and this one with this other cloud.

Who has got the contractual responsibility if anything goes wrong, who is the principle contractor now? All of these things and not beyond the will of man. I mean, if. If one was in the United States or in Texas where I spent a lot of time, I said to my lawyers, the customer wants these contractual structures.

Okay, we'll get it to to you Tuesday. But of course we're in Europe and we are just sucking our teeth a bit and saying, well, we're not big enough to actually take the contractual responsibility. So this is something where the demand is supply need to work together

Last year I did the conference 10 days after the inauguration of President Trump. Everyone was in total confusion. And the conference was titled The Perfect Storm because we, we didn't know where we were. Can Europe make it? This year is a follow up to that. The title is Rebuilding European. Sovereignty Rebuilding, because we were once great and we've lost the plot, but we need to rebuild it.

There is actually, uh, an important message in there because it's not, it's a lot about tech, but not, uh. Not just in inverted commas about tech. So the key message is this tech is an all purpose technology, and I'm thinking digital, and I'm thinking ai, meaning it goes through every critical sectors of the economy goes.

It will matter for us standing in every critical sector of the economy, in manufacturing, again, in defense and so on. So the thread that the conference has is really to start from digital and assert that, you know. Digital matters for growth and productivity, not just because we want to have a digital industry.

So. There is a Phil Rouge, there is a thread in my head that essentially kind of motivates this event, and then the last portion of the conference will be beating up the regulators. I'll invite them all and give them, uh, a bit of stick because, because, you know, I know them all. I worked with them for years.

In fact, one of them tweeted last night, oh my God. I'm going with Christine and the Lions. Then next week. Because he knows I'm gonna give him a hard time. And the problem is that our, our, our antitrust people and regulators have been incredibly dogmatic. So, you know, all of the reluctance that, all of the pushback of our commissioners against the ideal national champions.

Terrible predicament.

Has he helped?

There is also this completely insane narrative, which is. The Americans hate us. Donald Trump hate us and wants to undermine Western European democracy because fundamentally he's jealous of what we have. I've heard the craziest thing from the squirrels mainly, but most, uh, also from politician. There are several points back.

I know the people who wrote that piece in in DC and paradoxically, some may say they are total europhiles. They're total oph profiles. They live, however, probably in a mythical kind of vision of Europe, but Don Abbey, in which they think, you know, Europe is still this kind of quaint place and should remain quaint and white.

It has given up because of excess immigration. It's

You said then that Europe was gonna wake up and I don't know if you saw Lunik. Saying, you know, with Rachel Reeves looking like, uh, a complete ghost with nothing to say sitting next to him. I mean, talking about a non-existent entity. He said it like it is. He said Europeans are committed to zero carbon, uh, zero carbon by 20.

13. You don't have a single battery factory in Europe, so you're gonna depend from China. What are you thinking?

Big funds like EQT, like Atomical, like Proso have declared. They have a European. Funding strategy. They see early profit opportunities doing. Uh, coming up in Europe, uh, Andrew Klinger just announced prototype, a number of people. I've got people kind of building a Euros stack fund for me.

Really enjoyed it. Thank you.