In the film Moneyball, telling the story of how the Oakland A’s changed baseball forever, the breakthrough wasn’t discovering new statistics but using them better than anyone else.
The lesson for countries lagging behind in the technology race is simple: success often belongs not to the inventor but to the one who applies a new idea most effectively.
How Europe’s Digital Divide Shapes Competitiveness
The same is true of Europe’s digital technology. The European Union has fallen behind on Artificial Intelligence. But there is still hope. As with baseball and statistics, the real power of technology lies less in its invention and more in how widely it spreads across the economy.
A new paper from ECIPE looks at how Europe is faring in the adoption of digital technology:
Digital adoption across the EU is deeply uneven. Smaller open economies such as the Nordic countries, Ireland and the Netherlands are frontrunners.
Meanwhile, Europe’s large economies — Germany, France, Italy and Spain — sit in the middle of the rankings.
Within sectors, the story is similar: Europe’s carmakers should be rushing into autonomous driving, but they are far behind in their adoption of digital technologies.
The Regulatory Maze Blocking Innovation
So, what can the EU do? If European companies are not the ones inventing the next generation of AI systems, then at the very least they should be the first to use them. That requires the best possible regulatory framework: one that enables businesses to adopt digital technologies swiftly.
Sadly, that’s still not the case today.
A European firm keen to roll out a new digital tool faces three layers of regulation.
First, it must comply with EU-level laws such as the GDPR, the Digital Markets Act (for gatekeepers) or the AI Act.
Then it must meet the national rules in its home country.
Finally, if it wants to export digital services, it must adjust again to the different regulations of its target market. Europe may have a single market for goods, but when it comes to services – where most digital technologies are used – the single market looks like a home run on paper but rarely clears first base.
This matters. The great promise of digital technologies lies in their ability to scale up effectively once developed. But if regulation inflates compliance costs, firms will think twice before investing in new digital systems. For many, the rational choice is simply not to bother. Europe’s future digital champions will never emerge if they are buried under paperwork before they can grow.
The effects are already visible. Countries and sectors that use fewer digital technologies are less productive and generate more value.
Regulatory restrictions reduce the uptake of digital technologies and, through that channel, cut competitiveness. We estimate the effect at 1.3 per cent of value-added.
That may sound like a rounding error. But applied to the EU’s private-sector value-added of €10,061 billion in 2022, it amounts to €131 billion lost, equivalent to more than €300,000 per EU company – every year.
Giving Europe a Chance to Win
This is why the European Commission’s Digital Omnibus is so important. European Commissioner Henna Virkkunen comes from Finland, the Member State with the highest percentage of firms using digital technology. If anyone understands the importance of digital diffusion, it must be her. Europe cannot afford to fall further behind in digital adoption.
Yet, lowering the reporting requirements of EU digital regulation is not enough. The EU must dismantle the barriers that still hold back digital and non-digital services. That is why the latest State of the Union address by Commission President Ursula von der Leyen also mattered. For the first time, she acknowledged the problem and proposed a Single Market Roadmap to 2028 for services.
In Moneyball, the Oakland A’s won not by outspending rivals, but by using the tools they already had more effectively. Europe faces the same challenge. Its future competitiveness will not be decided by whether Europe invents every breakthrough, but by how quickly and widely it puts them to use. Play the game smarter, and Europe still has a shot at winning.