Europe’s Digital Future at Risk: Nokia and Ericsson Call for Urgent Action
Europe’s technological competitiveness is in peril, and the time to act is now. At a recent summit, industry leaders Pekka Lundmark, President and CEO of Nokia, and Börje Ekholm, President and CEO of Ericsson, sounded the alarm, urging European authorities to implement radical regulatory changes to secure the continent’s digital future.
“European competitiveness already has one foot in the morgue,” warned Lundmark. “Our real GDP is 30% lower than that of the US, the EU’s share of the Fortune Global 500 continues to decline, and our digital future looks less certain than ever.”
The stark reality is that Europe is falling behind its global rivals, particularly the United States.According to Henna Virkkunen, Vice-President of the European Commission for Technological Sovereignty, the GDP gap between the US and the EU has doubled from 15% to 30% over the past two decades. American companies now invest 60% more in research and growth (R&D) and 50% more in capital expenditures than their European counterparts.
The summit was anchored in the findings of a report by Mario Draghi, former Italian Prime Minister and European Central Bank President. Published in September 2023, the report highlights Europe’s lag in technology and economic growth. One glaring issue is the dominance of US tech giants, whose R&D budgets far exceed those of European firms. A McKinsey Global institute report reveals that European companies are €450 billion behind in R&D and capital formation in the technology sector alone.
Adding to the challenge, Europe has not produced a company with a market capitalization exceeding €100 billion in the last fifty years. Many successful European startups, including 30% of unicorns between 2008 and 2021, have relocated their headquarters to the US, where they can scale more rapidly.
“Companies like Ericsson already invest disproportionately more in R&D in Europe. If other regions continue to advance rapidly, this model cannot survive,” Ekholm emphasized. “The EU must implement the recommendations of the Draghi and Letta reports to enable the technology sector to play a key role in ensuring Europe’s future prosperity.”
The summit marked a historic collaboration between Nokia and Ericsson, underscoring the urgency of the issue. Enrico Letta, President of the Jacques Delors Institute and former Italian Prime Minister, echoed their concerns, stressing the need for Europe to accelerate investment in advanced connectivity infrastructure.
To address these challenges, Nokia and Ericsson have outlined an eight-point action plan for EU decision-makers:
| action Plan for Europe’s Digital Future |
|———————————————|
| 1.Implement the Draghi and Letta reports to drive innovation and reduce fragmentation. |
| 2. Strengthen R&D, access to capital, and support for technology leaders. |
| 3. Simplify regulations and create a true single digital space. |
| 4. Fully implement 5G security tools for economic resilience.|
| 5. Reform competition and M&A guidelines to support market consolidation. |
| 6.Set clear 5G deployment targets and replace spectrum fees with incentives. |
| 7. Align connectivity with the EU’s green goals. |
| 8. Ensure fair trade practices and withdraw harmful legislative proposals. |
The stakes are high. according to Ericsson, the R&D spending of the “Magnificent Seven” US tech giants—Apple, Tesla, Amazon, Microsoft, Alphabet, Meta, and Nvidia—alone accounted for 50% of all R&D spending in Europe’s public and private sectors in 2023.
Europe’s digital future hinges on decisive action. As Lundmark aptly put it, “Draghi and Letta have already provided the framework. So let’s act.” The time for debate is over; the time for implementation is now.
Headline:
European Competitiveness in crisis: An Interview with Dr. Alexandra Karadimas on Nokia and Ericsson’s Call for Action
Introduction:
Europe’s digital future hangs in the balance as its technological competitiveness lags behind global rivals, especially the United states. in a recent summit, industry leaders Pekka Lundmark (Nokia) and Börje Ekholm (Ericsson) emphasized the urgency of the situation, calling on European authorities to initiate radical regulatory changes. We sat down with Dr.Alexandra Karadimas, a renowned expert on European tech policy and an associate professor at the College of Europe, to discuss the challenges, recommendations, and the eight-point action plan proposed by Nokia and Ericsson.
The State of European Technological Competitiveness
World-Today-news (WTN): Dr.Karadimas, what’s your assessment of Europe’s current technological competitiveness?
Dr.Alexandra Karadimas (AK): Thanks for having me. Indeed, Europe’s technological competitiveness is in a dire state. The GDP gap with the U.S. has doubled in the past two decades, reaching 30%. American companies are investing 60% more in R&D and 50% more in capital expenditures than their european counterparts. Moreover, no European company has surpassed a market capitalization of €100 billion in the last 50 years, and many prosperous European startups have relocated to the U.S.
Europe’s Lag in Technology and Economic Growth
WTN: You’ve mentioned the가가 gap in R&D investment. how does thisTransinguish Europe’s progress in technology and economic growth?
AK: The R&D gap translates directly into Europe’s technological lag. According to a McKinsey report, European companies are €450 billion behind in R&D and capital formation in the technology sector alone. This underinvestment hinders Europe’s ability to innovate, develop cutting-edge technologies, and maintain a competitive edge in the global market. Consequently, European economies struggle to match the economic growth rates of their U.S. counterparts.
Impact of US Tech Giants’ Dominance
WTN: How does the dominance of U.S. tech giants exacerbate Europe’s digital divide?
AK: The dominance of U.S. tech giants further widens the digital divide.These companies have enormous R&D budgets that far exceed those of european firms. In 2023, the ‘Magnificent Seven’ U.S. tech giants accounted for 50% of all R&D spending in Europe’s public and private sectors. This asymmetry enables U.S. companies to innovate quicker, creating self-reinforcing network effects and undermining Europe’s ability to foster homegrown tech giants.
Nokia and Ericsson’s Eight-Point Action Plan
WTN: Nokia and Ericsson have outlined an eight-point action plan for EU decision-makers. How feasible and effective is this plan?
AK: Nokia and Ericsson’s action plan is aspiring and comprehensive. It addresses key challenges facing European tech competitiveness. Implementing the Draghi and Letta reports, strengthening R&D, simplifying regulations, aligning connectivity with green goals, and ensuring fair trade practices could considerably bolster Europe’s digital future. However,successful implementation requires unified political will,substantial resources,and patience. The plan’s feasibility also depends on EU member states’ ability to cooperate and align their policies.
The Urgency of Action
WTN: With europe’s digital future hanging in the balance,what steps should EU authorities take immediately?
AK: EU authorities should immediately start working on implementing the most pressing recommendations from the Draghi and Letta reports. This includesす strengthening R&D efforts, encouraging market consolidation, setting clear deployment targets for connectivity, and tackling harmful legislative proposals. Moreover, they should continue dialogues with industry leaders and other stakeholders to monitor progress and gather input on policy reforms.
Closing thoughts
WTN: Any final thoughts on Europe’s digital future and the challenges ahead?
AK: Europe’s digital future is indeed at risk, but it’s not too late to turn the tide. Bold, coordinated action from EU authorities, along with genuine collaboration between industry, academia, and policymakers, can revitalize Europe’s technological competitiveness. As Nokia and Ericsson have reminded us, the time for debate is over. Now is the time for decisive action.
