Table of Contents

Artificial intelligence (AI), big data, fifth-generation (5G) wireless technologies, quantum computing, and autonomous robotics are transforming economies and societies while altering geopolitical realities. These innovations trigger complex debates about their design characteristics, legal and ethical aspects, and broader deployment in a data-driven world. U.S. and Chinese tech giants like Apple, Facebook, Google, Microsoft, Alibaba, Baidu, Huawei, and Tencent are leading the latest developments in these strategic fields, advancing the U.S. and Chinese quests for international technological and digital supremacy.

In this context, where the United States and China are driving the global race for technological innovation, the European Union (EU) has exerted global influence mainly through its regulatory standards, by pushing digital companies toward greater commitment to the protection of fundamental rights. In the coming years, the EU is likely to continue to play to its strengths as a standard setter, by adopting a new wave of regulations designed to further entrench its human-centric and rights-focused regulatory approach as the foundation of the digital economy. But the EU will also seek to define its role in a more geopolitical environment, where it faces mounting pressures to pursue technological sovereignty while navigating regulatory conflicts with China and the United States alike.

The EU’s Role and Reconciling Internal Tensions

Anu Bradford
Anu Bradford is a nonresident scholar in the Europe Program at the Carnegie Endowment for International Peace.
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One of the EU’s greatest strengths in the global contest for influence is the union’s normative leadership and ability to set global regulatory standards in a variety of industrial fields and policy areas. Yet, the EU’s regulatory power alone will not allow the union to achieve its goal of pursuing what policymakers have vaguely termed European technological, digital, or data sovereignty. The fragmentation of the EU’s digital single market, difficulties in attracting human capital and investment, and a lack of commercial competitiveness in critical technological areas, such as AI and quantum computing, remain great impediments.

There is also a tension between the EU’s instrumentalist and value-driven visions in pursuing technological sovereignty. When it comes to AI, the EU’s added value is in leveraging its strong regulatory and market power to forge a competitive edge under the notion of trustworthy, ethical, and human-centric AI. But the EU also portrays AI and other technologies as instrumental for its strategic and technological autonomy. Yet, the EU needs a new mindset, new policies, and new investments to operationalize this objective. Despite its rhetoric of building technological sovereignty, the EU has been lagging behind in cutting-edge digital innovation and compromising its strategic aspirations—leaving the union better placed to pursue regulation than innovation.

Raluca Csernatoni
Raluca Csernatoni is a visiting scholar at Carnegie Europe, where she works on European security and defense with a specific focus on disruptive technologies.

To bridge this tension line between the EU’s normative aspirations and its accomplishments, regulation should help turn AI applications into a competitive and strategic advantage for the European technology base and economy. The EU will eventually need to translate both its technological sovereignty–building rhetoric and its normative views into a concrete strategic vision that fulfills the union’s interests and values in critical technological areas. This is particularly true for AI, a transformative and enabling technology with monumental societal, economic, and military implications for capital-rich countries with advanced information economies, such as the EU member states.

The window of opportunity for consolidating a distinctive European approach to regulating new tech on the international stage is closing fast. As the EU struggles for greater strategic autonomy and future technological leadership, it should also strive to shape a still-nascent global governance landscape for AI. The EU also faces the challenge of ensuring that its regulations do not hamper homegrown innovation while fostering Europe’s strategic autonomy in this key domain. European regulators must therefore strike a careful balance by devising ethically driven policies that avoid the dangers of overregulating new technologies, given the innovation and investment gaps in strategic scientific and industrial fields.

Technological Sovereignty Is Not the Only Answer

Techno-nationalism may be a tempting strategy in today’s tense geopolitical environment. Yet, it comes with notable risks and costs. Territorializing supply chains under a fortress-type rationale is not a viable path for the EU. The pursuit of technological sovereignty could unravel interdependent global supply chains, cooperative projects to develop critical technologies, and data sharing and transfers. Building European champions with the help of competition rules inspired by industrial policy would risk reducing, not bolstering, the competitiveness of European industry.

The EU should reconcile its quest for technological sovereignty with a commitment to openness and cooperation. In this regard, the union should boost its technological and digital capacity to reduce its dependence on others and work with its allies toward an ethics-driven approach to digital governance. The EU should also seek to become a global standard setter in AI and fully use multilateral platforms and partnerships with the private sector and like-minded countries.

The EU cannot safeguard its economic and strategic interests alone. Instead of overly stressing the need for technological or digital sovereignty, the EU must actively engage on its own terms with the United States and other democratic countries on shared values and norms of responsible technological innovation. In this context, the global governance of emerging technologies will benefit from stronger multilateral, international, and transatlantic cooperation in a world where technology is increasingly a key driver of great-power rivalry.

This competition should focus on setting regulations, guidelines, and best practices to ensure that the research and development and uses of emerging technologies take into account socioeconomic, legal, and ethical considerations. Here, the EU has certain advantages on which it should seek to better capitalize by building and reinforcing partnerships. The EU’s experience with data-privacy regulations, such as its flagship General Data Protection Regulation, can serve as an example for establishing global norms for emerging technologies and the private sector. The EU’s February 2020 white paper on AI and any future AI-related legislation have a similar potential to influence global regulatory standards.1

A Transatlantic and Multilateral Technology Alliance

Transatlantic tensions over the digital agenda are real. These include different views on data privacy, antitrust regulation, and digital services tax, to name a few. The European Commission’s Digital Services Act and Digital Markets Act are also expected to trigger U.S. resistance because of perceptions in the United States that they primarily target American tech giants, such as Amazon, Apple, Facebook, and Google.2 These regulatory conflicts have the potential to impose serious economic and political costs on the EU-U.S. partnership. For example, if the EU and the United States do not reconcile their differences over data transfers, the economic consequences for the future of transatlantic digital trade will be dire.

Notwithstanding these differences, transatlantic cooperation can generate a distinctive strategic advantage for both the United States and the EU. Such cooperation is particularly critical given China’s recent attempts to build and leverage its global influence over technology standards. Chinese companies—all with varying ties to the Chinese Communist Party—have supplied technological infrastructure and critical digital services to countries around the world, exporting their standards in the process. China has also supplied AI surveillance technology to numerous governments eager to deploy Chinese technology to illiberal ends.

To counterbalance Chinese influence and the diffusion of digital authoritarianism, the United States and the EU need to provide an alternative regulatory export regime. This should consist of cutting-edge technology that conforms to standards that protect individual rights and liberal, democratic values. The transatlantic partners can do this by combining the EU’s global regulatory prowess and U.S. companies’ edge in technology.

The United States and the EU also have a shared interest in cooperating on multilateral standard setting. China has assumed control of key positions in relevant international organizations and agencies—such as the Internet Corporation for Assigned Names and Numbers and the International Telecommunication Union—which has further allowed the Chinese government to entrench its regulatory standards and surveillance practices across the world.

The United States and the EU have been slow to respond to these developments. Aligning transatlantic strategies on standardization and reclaiming influence over international standard setting is critical to preserving strong democratic governance of emerging technologies. Whereas a certain degree of divergence between the U.S. and EU agendas is to be expected, the administration of U.S. President Joe Biden is expected to embrace multilateralism. Extending partnerships and deep cooperation with like-minded countries is one of the main levers that the United States, the EU, and other democracies have over a global rival such as China.

The Path Ahead

The EU needs to continue its global leadership in standard setting, but it should also invest heavily in research and innovation, so that it becomes a source of frontier technologies. The EU should encourage European autonomy in several key technological areas, such as next-generation supercomputing, and use AI-enabled technologies to develop new business models. The union should also accelerate the digitization of member states’ economies to promote Europe’s global competitiveness. The completion of the digital single market would allow the EU to unleash the power of its strong internal market for economic growth and European competitiveness. Meanwhile, well-integrated capital markets would be significant in fostering more investment in European innovation.

Working with the United States and other like-minded partners allows the EU to ensure that its digital economy will be grounded in liberal democratic values, as opposed to authoritarian principles. Building strong capabilities for European innovation offers the best path toward fulfilling the EU’s competing desires for strategic autonomy and influence over the values and norms that govern the global digital marketplace. Given China’s quest for technological supremacy and efforts to increase its influence, neither the United States nor the EU can afford to forgo cooperation and joint efforts to extend their alliance to other democratic nations with shared interests and values.

 

Notes

1 “White Paper: On Artificial Intelligence—a European Approach to Excellence and Trust,” European Commission, February 19, 2020, https://ec.europa.eu/info/sites/info/files/commission-white-paper-artificial-intelligence-feb2020_en.pdf.

2 “The Digital Services Act Package,” European Commission, December 16, 2020,https://ec.europa.eu/info/sites/info/files/commission-white-paper-artificial-intelligence-feb2020_en.pdf.