Banking, manufacturing, and other EU businesses warn “tech sovereignty” could hit profits and competitiveness as Brussels aims to cut reliance on US tech giants
Companies argue that ‘tech sovereignty’ drive could hit profits and undermine continent's competitiveness
Context & Ripple Effects
The warning adds private-sector resistance to a policy agenda that had already moved from discussion into legislative drafting, with EU officials examining the security risks of dependence on US technology in work on new sovereignty legislation. Google had also argued that the proposed package could conflict with the bloc's competitiveness goals in its earlier criticism of the plan.
The debate extends beyond commercial software procurement: European military officials have raised concerns about dependence on US software and networks and its implications for security. That makes the business case against costly or restrictive substitution central to how Brussels calibrates the initiative.
First-order effects
- EU banks, manufacturers and other companies gain a common basis to challenge measures that could raise technology costs or constrain use of established US providers.
- Brussels faces a more explicit trade-off: reducing external dependence while avoiding policies that the businesses expected to carry them say could weaken margins and competitiveness.
Second-order effects
- The objections put pressure on the eventual package to distinguish strategic dependencies from routine commercial technology use, rather than applying a broad preference for European alternatives.
- US technology suppliers and European alternatives will both be drawn into a procurement and compliance debate in which customers' switching costs become a core point of contention.
Third-order effects
- If the policy proceeds, European technology strategy is likely to be judged less by the goal of autonomy alone than by whether domestic infrastructure can meet enterprise requirements without imposing a competitiveness penalty.
- The episode points to a durable tension in digital industrial policy: security-driven diversification can redistribute dependence, but it does not automatically create commercially viable substitutes.
The trend: Europe is shifting from regulating large foreign technology providers toward treating access to cloud, AI and software infrastructure as a strategic-dependence question.