Europe is at a crossroads on digital in the age of technological sovereignty

"Digital sovereignty is becoming a strategic issue for Italia and Europe: we cannot afford not to fully govern this nervous system, to depend excessively on political and economic choices of other geopolitical areas," says Andrea Rangone, co-founder of the Digital Innovation Observatories. "Strategic choices must be made now in order to regain control of it: strengthening digital infrastructures, developing skills and creating an innovation ecosystem integrated between research, industry and institutions.

Computing capacity today is a strategic resource comparable to energy infrastructure or transport networks. Europe suffers from high industrial concentration: 53% of European data centre power (7.4 GW) is controlled by only 10 operators (7 of them US) out of 182.

Italia is emerging as Europe's new data centre hub: by 2028, the country will exceed 1 GW of rated power thanks to a potential EUR 25 billion investment in new infrastructure. However, in line with the rest of Europe, development is heavily dependent on non-European infrastructures and technologies: 45% of planned investments come from the 3 American cloud hyperscalers.

A dependency that is prompting national enterprises and institutions to reflect on their technology sourcing strategies: 37% of large Italian companies have initiated evaluations on the 'repatriation' of critical workloads to European clouds.

According to research, quantum computing is particularly promising, with a Quantum Europe Strategy aiming to create a leadership position by 2030. So far, EUR 9 billion of public funds have been earmarked for quantum technologies in Europe, but only 10 per cent is directly managed at EU level.

While private investment at the moment remains limited compared to US numbers with heterogeneous situations in the different European countries: in Italia, EUR 56 million have been invested in Italian quantum computing start-ups in the last two years, compared to EUR 235 million in France.

In telecommunications, Europe suffers from strong industry fragmentation, which has eroded the spending capacity of operators, triggering a drop in investment, aggravated by the difficulties in grounding the potential of 5G.

The situation is particularly serious in Italia, where telecommunications operators' revenues have decreased by 30% since 2010 and EBITDA by 50%, reducing the resources available for infrastructure development.

In satellite connectivity, the competition is dominated by the United States: to reduce the gap, the European Union has launched the IRIS² project, with EUR 10.6 billion of public and private investment to build a constellation of around 300 new satellites, with the participation of Italia as well.

On the connectivity of the future, the Digital Innovation Observatories see an opportunity for Europe to build a sovereign terrestrial and spatial infrastructure capable of high performance, reliability, resilience and security.

At the same time, new telco infrastructures can become open platforms capable of enabling new services and business models.

However, the competitive lag in satellite rollout, as well as regulatory fragmentation and the lack of standards between Member States and the need for a new competitive set-up must be addressed.

Europe is investing to catch up on Artificial Intelligence: the InvestAI initiative will mobilise EUR 200 billion to accelerate the development of artificial intelligence, while the EU AI Act represents the world's first comprehensive regulatory framework on the subject.

From a scientific point of view, the continent is well placed: 15% of global publications on AI come from Europe, compared to 9% from the US. By contrast, technology transfer is limited: only 3% of global patents on AI are European, 14% US.

And the gap is even sharper in investments: in 2024, European AI start-ups raised around $19 billion, in the US $109 billion. In Italia, the value stops at around $900 million.

According to the Observatories, Europe can aim for European leadership in vertical AI applications in strategic sectors and differentiate itself in Trustworthy AI in regulated applications, but it must overcome dependence on non-EU models and the barriers to entry for start-ups and SMEs represented by the stringent constraints of the AI Act.

According to the Osservatori Digital Innovation, large Italian companies have made progress in process digitisation, data-driven and cybersecurity, while SMEs lag behind.

Basic solutions for planning and production are widespread, but integration and advanced automation are limited. CRM and marketing automation are used by most large companies, while more complex platforms and customisation remain uncommon.

In digital relations, almost all large companies send invoices online, but orders, Bills of Lading and e-shops are less widespread; SMEs show further gaps. On the data-driven front, only a minority have formalised strategies; on cybersecurity, attacks remain frequent and advanced protection is adopted by only a few companies. Investments reflect these priorities: cybersecurity leads the choices (65% large companies, 45% SMEs), while AI and data management mainly interest large companies, and SMEs focus on Industry 4.0 and Cloud.

Maurizio Molinari, Head of the European Parliament Office in Milan, stressed that 'the AI Act, the Digital Services Act and the Digital Markets Act show how the EU can turn digitisation into a real opportunity for citizens and businesses, in a context of hybrid warfare and global upheavals'.

Claudia Colla, Director of the European Commission Representation in Milan, added that 'technological leadership is today a matter of security, democracy and sovereignty. Digital transformation affects economic competitiveness, job quality and infrastructure resilience, and Europe must be the place where technologies are born and grow while respecting democratic values'.