EU Seeks a New Tech Leader, But Not ChatGPT

ChatGPT is governed in Europe rather than being established. There are grounds for regretting that. The early results of the artificial intelligence weapons competition may seem ridiculous, but they serve as yet another example of how technologically behind the US and China the European Union is.

How did the place where Nokia Oyj and Ericsson AB were founded turn into the place where technology forgot? Some point the finger at the terms GDPR, DMA, and DSA, which are synonymous with Brussels red tape, despite the fact that the Googles of this world appear to be more worried by ChatGPT than any EU fine.

Perhaps a greater illustration of the underlying ailment afflicting European IT is provided by Breton’s former business, Atos SE. The industry leader in aerospace, Airbus SE, has suggested investing in Evidian, the big data and cybersecurity division that Atos intends to spin out this year.

By encouraging the growth of cloud and cutting-edge computers, the proposed deal is being marketed as enhancing European digital “sovereignty.”

According to the company’s share price, Atos is not a remedy for Europe’s IT crisis but rather one of its symptoms. In the 2010s, the company more than doubled its sales and personnel through acquisitions, but it moved too slowly away from antiquated IT infrastructure and into the cloud.

Microsoft Corp. and Alphabet Inc., two corporations vying to put chatbots with personalities in every house, spent a tonne of money expanding their own cloud operations. These two companies, along with Amazon.com Inc., now dominate two-thirds of the global market.

The disparity in R&D between the US and Europe appears significant in this case. Alphabet and Microsoft were two of the top three worldwide firms in 2021 in terms of research expenditures, spending about $30 billion and $23 billion, respectively, according to data from the European Commission.

The only company from the EU to place in the top 10 spent 15.6 billion euros ($16.6 billion). Volkswagen AG. At 2.9 billion and 57 million euros, respectively, Atos and Airbus both fell well behind.

Governments could think that creating ever-larger regional or domestic champions will be enough to close the gap. Yet, attempts to forge a “European cloud” have not proven particularly fruitful.

Olivier Coste, a former CEO of Atos, claims that the high cost of failure in the EU—in the form of corporate restructuring—is the root of the issue in a new book about the technology divide in Europe. In contrast to the US, it is more expensive, takes longer to negotiate, and demoralizes the remaining employees to fire an engineer for several hundred thousand euros.

That discourages risk-taking on software projects with a high failure rate, in his opinion. It also explains why in the EU, investments in 21st-century technology are outpaced by those made by industrial businesses from the 20th century, which excelled at incremental rather than radical innovation.

Coste’s recommendation is to lower the cost of failure. He advises adopting a Danish-style “flexicurity” strategy for tech jobs.

More hiring and firing flexibility would arise from this, combined with a safety net of enough money to protect individuals who do lose their employment. Others, like the US Defense Advanced Research Projects Agency, or Darpa, support more disruptive innovation, so his viewpoint is by no means universal. Another option would be to pay European researchers more.

It is clear that the most recent round of layoffs in Silicon Valley, which followed a pandemic of overhiring, should not be imitated. Atos isn’t exactly in a favorable situation either, either. Through 2023, it will need an additional 1.6 billion euros in the capital due to postponed restructuring.

It’s not all bad news, either. Recent initiatives like the 3.8 billion euro venture capital initiative from the European Investment Bank could speed up investment and innovation.

But as Europe defends its cyber-industrial complex while operating chatbots, it’s hard to avoid having memories. Lawmakers’ only choice right now, at least until the next big item comes along, is to demand a “European ChatGPT.”