The European Union has built some of the world’s most ambitious digital regulations. From the Digital Markets Act and Digital Services Act to the Data Act and upcoming AI Act, a clear logic runs through them: the bigger you are, the more you must comply, report, and share.
This asymmetric regulation model is designed to rebalance the digital economy by placing stricter obligations on a handful of dominant—mostly non-European—tech platforms. The intent is to correct market distortions and protect users. On principle, it makes sense.
But in practice, something is shifting. These laws are no longer solely about fairness, transparency, or competition. In Brussels, digital regulation is increasingly seen as a tool of economic sovereignty and geopolitical leverage. The prevailing mood suggests it could soon be used not to build a stronger European ecosystem, but to constrain foreign influence, particularly from the United States.
This shift is subtle, but unmistakable. Policymakers are speaking more openly about using digital regulation to assert Europe’s independence from Silicon Valley. That ambition is understandable—but it risks turning Europe’s entire tech sector into a bargaining chip in transatlantic trade disputes.
With digital services among its largest exports, the U.S. has already taken notice of Brussels’ increasingly pointed regulatory agenda. What began as a principled attempt to regulate powerful platforms is drifting into regulatory retaliation. The consequences won’t stop at compliance burdens. They’re likely to spill into broader trade tensions, investment headwinds, and splintered standards.
Europe, once seen as a trend-setter for thoughtful digital governance, now risks becoming known for digital protectionism.
While regulators aim at Big Tech, it’s Europe’s own digital ecosystem—startups, scale-ups, and growth-stage companies—that may end up paying the price.
Asymmetric regulation was meant to protect SMEs by carving them out of complex requirements. But in reality, it penalises success. The moment a European company grows large enough to compete globally, it falls into the same compliance trap designed for trillion-dollar giants. Data-sharing obligations without reciprocity, vague reporting rules, and high administrative burdens become unavoidable.
Rather than encouraging scale, the EU is effectively setting a ceiling on ambition. For smaller firms, “simplification” often means inconsistent enforcement and legal uncertainty across member states.
If this continues, Europe won’t produce digital champions. It will produce cautious companies, strategically staying below the threshold that triggers regulatory escalation.
Yes, oversight is necessary. The dominance of Big Tech deserves scrutiny. But sovereignty cannot be built on constraint alone—it must also empower. That’s the missing half of Europe’s digital strategy.
By tying regulation to geopolitical objectives, the EU risks undermining the very innovation it seeks to foster. If other regions mirror this approach—and Washington responds—the global digital landscape could fracture into competing compliance blocs. For a region that depends on scale, interoperability, and openness, that would be a self-defeating move.
In the U.S., the tech industry is already pressuring politicians to rethink tariffs and regulatory overreach. Europe’s tech community must do the same.
Europe’s founders, investors, and innovators need to find their voice. They must make it clear to policymakers that the tech sector is not a tool for geopolitical point-scoring—but a cornerstone of Europe’s future prosperity.
A healthy digital ecosystem needs guardrails. But it also needs freedom to scale, compete, and thrive. Regulation alone won’t deliver sovereignty. Without a complementary strategy for growth, Europe risks regulating itself into irrelevance.
