Big Tech is rewiring the world. These very large private companies are leaders in research and development (R&D) and now wield unprecedented and unparalleled influence in the economy and beyhond. In this redefined world, Europe faces a number of agenda-setting questions. This policy brief aims to anticipate the implications of ‘Big Tech’ for Europe’s future by 2040.

The future(s) of Big Tech: Questions, challenges, strategies for Europe

Big Tech are here to stay. But they do not stay the same. They have a hunger for innovation. In terms of R&D, the top 5 US Big Tech spend in a single year more than the double of what the EU-27 committed collectively to the Horizon Europe, which runs for seven years. Big Tech corporates leverage cloud infrastructure, digital platform business models, and increasingly AI technologies to capture expansive market positions and to achieve superior performance. Another obvious fact is that these economic titans are not from Europe.

A set of questions thus suggest themselves: In a market-driven economy, does it matter for Europe? If it matters, will conventional remedies like regulation and competition policy be enough to cope with the ramifications? Is it time to go post-neoliberal phase and engage in informational industrial activism of a disruptive kind? Or, on the contrary, will bottom-up decentralised entrepreneurial incrementalism sort out any temporary European competitiveness and governance failures?

In a new report to the European Commission, these four questions are dealt with by means of a scenario-building exercise. Four authors, who also counted with inputs from 30 experts from industry and academia, make an attempt to anticipate how the European Union can regain its edge in a world re-wired by Big Tech.

Four scenarios put forward alternative challenges for the year 2040 from a Research & Innovation perspective (see Box). Scenario 1 ‘Winners Tech All’ is a world of high openness and mega-economies of scale and scope. In contrast, scenario 2 ‘Pax Technologica’ could be seen as a robustly negotiated multipolar environment. Scenario 3, ‘Re-matching’, envisions the recovery of a mixed tech economy where alternatives to incumbent Big Tech are viable. Finally, Scenario 4 is called ‘Closet Liberalism’and portrays a low-obstruction/wide-arena world where self-organised economic dynamics propel Europe back onto the global competitive map.

The policy implications are considered. The policy posture across scenarios and strategic stances for each scenario is rooted in three basic premises, i.e. the imperative to: protect pluralism (economic and societal), maintain a cosmopolitan outlook (in world affairs), and safeguard natural commons (including Earth and orbital resources). Based on these assumptions and the scenario analysis, number of strategic conclusions are drawn.

Out of the general and scenario-specific portfolios that were generated, a number headline policy options can be considered:

- The EU should reinforce and develop its own regulations and anti-monopolistic actions to constrain the market power of Big Tech Companies, but these are not sufficient to ensure autonomous economic development and well-being in the EU;

- It is needed that a new generation of European productive actors emerges to generate a productive capacity of the old continent in new infrastructuring fields, and if these are built as cross-European state-owned entities this is an option not to be disregarded.

- The EU Framework Programme and national research and innovation (R&I) budgets should be benchmarked not only against their past performance but also compared to the spending and strategies of Big Tech;

- ‘Big bet’ investments are needed in Europe, coupled with more serendipity-inducing experimental approaches.

Scenario sketches

Scenario 1: Winners tech all

This is a story of modernisation orchestrated around digital high-tech. The economy is not run by Big Tech but on infrastructures these private companies own and hone. Growing dependencies can be tolerated because benefits are shared and businesses are empowered to pursue their plans. The operating framework inherited from Globalisation assures a modicum of stability, namely informal institutions like the G7 or the G20 and formal institutions like the IMF and the World Bank. The US remains the sole superpower and maintains its role as agenda-setter. The room for manoeuvre for the EU is limited and it takes its place in the international division of labour.

Scenario 2: Pax technologica

The economy is a negotiated tension between pro-global business interests and pro-local (local referring to groups of countries with aligned interests cooperating and competing with each other, forming coopetitive clubs) political constraints. The drive to take advantage of economies of scale and scope has been tamed by enhanced regulation and hardened borders. Supply-chains are splintered and directed towards suppliers within the mega-regions composed of preferential partners, increasing costs but reducing uncertainty. Existing large tech firms must accommodate each other. Existing platform models are entrenched but are forced to grant access to their digital and logistic facilities, leading newcomers to not investing in their own subversive infrastructure. Stability is a value, not so much efficiency. The US retains its role as an economic-financial and political-military switchboard, but for a diminishing part of the globe. China is still challenging the dominance of the US both politically and economically. Other regional powers emerge. The EU is a switchboard of external and internal pressures, and this is the “Brussels Consensus”.

Scenario 3: Re-matching

What shapes the development of individual nations regions is their own path in a pluralist international scene. Pro-active productive policy makes sense, especially if coordinated among players. After years of blitz-scaling the tide turned, and Big Tech went into a fizzdown. Cross-regional/trans-sectoral innovative players gained mass and found expansive growth niches at key intersections of a complex (mix) economy with an active role of the public sector associated to national governments and international organizations. Commons governance generate citizen engagement and global fragmentation is controlled. An overstretched self-consumed US has to divide protagonism with other world powers. The EU is a network builder, it supports the catalysing and protection of the new core-inputs of the modernising economy.

Scenario 4: Closet liberalism

In this world commercial and financial integration proceeds and power continues to trespass national borders and overwhelm States. Large multinationals are seen to have a large impact in public governance, but tech monopolies matured becoming expensive and bad quality. There is a mesh of networks and competing authorities create an opportunity for decentralisation, especially at the local and city levels. The US serves its own interests and is more reluctant to assume its responsibilities in global public good provision. The EU preaches the superiority of the market order, but inside the EU everyone tries to re-interpret the rules of the game in its own benefit (fiscal responsibility is for the population not for businesses).

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