What to do about the EU tech dependency

Hello! This is Anna, writing from a train between London and Brussels. Today is 2nd November, and here is your weekly update on what matters most in the European Union.

This week’s briefing digs into Europe’s growing dependence on US Big Tech, the limits of the EU’s digital rulebook, and what it would take to turn digital sovereignty from ambition into reality. We were delighted to welcome Luise Quaritsch, Policy Fellow for EU Democracy at the Jacques Delors Centre, whose work focuses on platform regulation, digital democracy and the rule of law. She makes the case for tougher enforcement, stronger competition and credible European alternatives to loosen Big Tech’s grip on Europe.

Also in this newsletter, we update you on the race to succeed Christine Lagarde at the ECB, eurozone growth beating forecasts while France contracts, Italy’s 2027 budget and the Commission’s sign-off on its deficit leeway, and Parliament’s push for an EU critical raw materials centre. Don’t miss my selection of suggested good reads at the end of the newsletter.

A big thanks to Joe Pearn for his help putting this edition together. Feel free to share this newsletter with friends and colleagues, follow us on LinkedIn, and feel free to reach out at contact@whatsupeu.co

Best,

Anna

Europe is overwhelmingly dependent on a handful of US tech companies that provide the EU with a large share of its digital infrastructure and services. The EU imported more than €300 billion in digital services from the US in 2025, up from around €200 billion in 2016. Among other things, around 80% of EU corporate spending on software and cloud services flows to US vendors. Amazon, Microsoft and Google occupy almost 70% of the European cloud market.

US Big Tech’s dominance partly reflects digital markets’ tendency towards concentration, driven by self-reinforcing network effects and customer lock-in. Big Tech companies have leveraged these effects, existing customer bases, and tactics like bundling tools and hardware to dominate digital markets.

What Dependency Costs

The dependency on US Big Tech comes at a cost for Europe. As the US becomes a less predictable ally, the security risks are becoming clear. Where Big Tech runs essential digital infrastructure or handles sensitive data, the US government could in principle demand access or hold a “kill switch” – the ability to cut off essential services.

That same dominance also makes it harder for European competitors to emerge and gives Big Tech real discursive power over what information is seen. Big Tech’s economic weight, increasingly entwined with US state power, can let it sidestep rules that apply to other market actors. This undermines democratic institutions’ ability to exercise oversight over these companies.

Rules Without Teeth

The EU has recognized these risks and made digital sovereignty a top priority. Initiatives like the Tech Sovereignty package presented in June are designed to build European autonomy in Cloud and AI development.

The EU has also built an extensive rulebook: the Digital Markets Act (DMA) and Digital Services Act (DSA), in force since February 2024, specifically target the power of large online platforms and gatekeepers, complementing slow ex-post antitrust proceedings with clear ex-ante obligations meant to make digital markets more contestable and restrict problematic conduct.

Yet these regulations have been only modestly successful so far. The exact impact is hard to measure, but little in the data points to changing market dynamics. No serious competitors to Big Tech have emerged since the DMA came into force. And a recent study shows that Europe has become more, not less, digitally dependent since 2010.

At most, the DMA has made markets formally more contestable, for instance on consumer choice and interoperability. The DSA has also given users more rights on paper, but concerns over the protection of minors, addictive design and data protection persist.

Part of why the EU’s interventions have been largely ineffective could be that Big Tech companies have been pursuing a strategy of minimal compliance: conceding small adjustments while resisting anything that would weaken their underlying business model.

This practice has also been labelled “malicious compliance”. Apple, for instance, adjusted its terms to meet the DMA’s “anti-steering” obligations, which require letting customers point users to cheaper offers, but did so in such a restrictive way that consumers and business customers did not benefit from the change.

Platforms have also obstructed the DSA’s application, including by delaying procedures and providing incomplete data in response to researchers’ requests. The result: an appearance of compliance, with no real change underneath.

Weaknesses in the EU’s enforcement structure enable this strategy. The Trump administration has turned Europe’s digital regulation into a bargaining chip in trade talks, threatening retaliation if American companies are fined.

According to reports, the Commission has delayed decisions on several occasions, undermining a core reason the DMA was passed: letting regulators react quickly. Bowing to political pressure also costs the Commission credibility as an independent enforcer.

On data protection, the Irish authority is the lead regulator in the EU for these companies. It has been criticized for close ties to tech companies and underenforcement of EU data protection rules for years.

Three Ways to Add Bite

If the EU wants to reduce its dependence on US Big Tech, its regulatory interventions need more bite, or American firms will likely keep dominating digital markets and shaping technological developments. Even if EU countries replaced foreign providers for the riskiest services, they would remain dependent on US companies for the rest, with no real control over how those services are provided, and at a cost to Europe’s competitiveness and democratic principles.

To change that trajectory, there are three areas for action:

• First, market dominance and structural competition problems on digital markets need to be addressed more directly. To level the playing field, structural remedies, stricter merger control and fair taxation for big tech companies are necessary.
• Second, the EU must ensure that Big Tech substantively complies with its laws when providing services here – behavioral obligations must be implemented swiftly and substantively. The EU has the power to issue interim measures and higher fines if necessary.
• Third, enforcement gaps must be closed. A good first step would be ensuring enforcement agencies have sufficient resources and better coordination between them. The concentration of economic, social and political power now sitting with a handful of private companies likely exceeds that in other industries – a scale the EU’s response needs to match.

Europe’s digital sovereignty will depend on whether it can build credible European alternatives. Without contestable digital markets, however, it will be hard for European companies to attract the massive investment necessary.

That will require an ambitious regulator willing to withstand the inevitable backlash. The EU is not entirely powerless, though. Big Tech companies need the European market of 450 million wealthy consumers, and the US economy needs its Big Tech companies. The EU should use the leverage it has to take control of its digital future, build European alternatives and hold US Big Tech accountable.

ECB TOP JOB • Christine Lagarde said on 29 October she will leave the ECB in February 2027, nine months early. Her successor needs at least 16 of the 21 euro area countries, representing 65% of its population, so France and Italy together can block a pick.

Two names lead. Klaas Knot, the former Dutch central bank governor, has the Netherlands behind him and a hawkish reputation, while Spain backs Pablo Hernández de Cos, seen as more dovish.

Two more board seats fall vacant in 2027, those of chief economist Philip Lane and Isabel Schnabel. All three appointments are expected to be negotiated together, with France reportedly eyeing the economist post. EU leaders will meet three times before the end of 2026 to decide.

GROWTH SPLIT • The euro area economy grew 0.4% in the third quarter, twice what economists had forecast, according to Eurostat’s flash estimate of 30 October. Spain led the four largest economies with 0.6% and Germany managed 0.2%, while Italy stood still and France shrank by 0.1%.

France’s contraction, its second this year, came from a 0.6% fall in investment, and the finance minister, Roland Lescure, says the economy is “at a standstill”. Weaker growth and a 10-year yield near 4.94% make the 2027 budget assumptions of 1% growth and a 4.3% borrowing rate harder to meet.

The ECB, which kept its deposit rate at 2.50% on 29 October, says the energy shock is likely to push inflation up and growth down, with wages and underlying inflation still stable. Christine Lagarde said the pause does not rule out a hike, and the next decision will be announced on 17 December.

ITALY BUDGET • Italy’s cabinet approved on 28 October a 2027 budget with a 3.4% deficit, above the EU’s 3% ceiling, made possible by the national escape clause, which the Commission judged on 8 October would not endanger debt sustainability. Italy has pushed to use part of that room to ease household energy bills.

The package totals €26 billion, with €5.7 billion raised through new taxes on banks, insurers and energy groups. With living costs fuelling protests, the budget also cuts income tax for people earning between €50,000 and €55,000, a measure championed by Forza Italia that will cost the state €1.2 billion. Parliament must still approve the text, before elections in 2027.

RAW MATERIALS • MEPs want the EU to act more like an investor in raw materials. On 20 October they voted by 470 to 83 for a Critical Raw Materials Centre that would stockpile minerals, buy them jointly and take equity stakes in companies in exceptional circumstances.

Japan’s JOGMEC is the template, while the US sets the benchmark, having taken a 15% stake in rare earths producer MP Materials. The centre’s planned €2 billion fund is too small without more public and private money, says rapporteur Mohammed Chahim.

The Commission dropped its own plan for a centre this autumn, so the idea rides on the revision of the Critical Raw Materials Act, where Parliament must now negotiate with Member States.

• In The Atlantic, Anne Applebaum examines the Trump administration’s alleged efforts to reshape European politics from within, from Poland and Romania to Germany. Interference is usually something Europe accuses its adversaries of, so her suggestion that the threat may now come from across the Atlantic makes for an unsettling read.
• In the Financial Times, a review of two books asks whether the EU can unite a fracturing continent. Timothy Garton Ash offers a sobering perspective on a Europe struggling to reconcile its ambitions with its divisions, as strategic autonomy and enlargement test its shared purpose.
• In a timely Halloween special, POLITICO asks Who’s afraid of whom in Brussels, touring the rivalries and anxieties from Viktor Orbán to the Commission’s corridors. Beneath the humour sits a familiar truth, that European politics is shaped by what its protagonists fear losing, whether influence, political capital or control. A lighter read, a timely reminder.