Europe’s History Explains Why It Will Never Produce a Google

ON SUNNY evenings in Brussels, young Eurocrats mingle on the bar terraces of the Place du Luxembourg outside the European Parliament. The continent’s future leaders pay little heed to the bronze-green statue of John Cockerill at its center. The Englishman commemorated at the heart of today’s EU moved to Belgium from near Manchester in 1802, importing the latest steam technologies. He founded a machine factory in a chateau near Liège which grew into an industrial empire and helped make Belgium second only to Britain in industrial sophistication.

Is Europe living up to Cockerill’s legacy? The continent has world-class companies in fields like biotechnology, luxury cars and nuclear energy, manufacturing sectors incorporating sophisticated software (a BMW these days is as much a computer on wheels as a car). London, a global tech hub, is home to DeepMind, a leading artificial intelligence (AI) outfit; Stockholm is home to Spotify, a dominant music-sharing service; Cambridge-based Arm makes processor chips for almost all the world’s smartphones.

Yet still, Europe lacks large firms in areas like social media, e-commerce and cloud computing comparable in scale to America’s Google and Microsoft, or China’s Alibaba and Baidu. Of the world’s 15 largest digital firms, all are American or Chinese. Of the top 200, eight are European. Such firms matter. They operate dominant online platforms and are writing the rules of the new economy in the way Cockerill’s innovations did in his day.

Mariya Gabriel, the EU’s digital economy commissioner, worries that Silicon Valley and China now make the big decisions about the internet and that this affects European domestic policy. She is right. Even BMW, for example, does much of its cutting-edge research in California and Shanghai. In Brussels officials talk of a “Sputnik moment”, a sudden realization of its technological disadvantage, akin to America’s when the Soviet Union put the first satellite into space in 1957. Asked whether the continent will ever produce its own Google, one burst out laughing.

Europe’s history explains the lag. In the 18th century, its lack of standardization made it the cradle of the industrial revolution. Rules and markets varied. Entrepreneurs who did not find support or luck in one country, like Cockerill, could find it in another. All this created competition and variety. Today, however, Europe’s patchwork is a disadvantage. New technologies require vast lakes of data, skilled labor and capital. Despite the EU’s single market, in Europe, these often remain in national ponds. Language divides get in the way. Vast, speculative long-term capital investments that make firms like Uber possible are too rarely available on European national markets. True, there is progress. European universities are working more closely together, and in 2015 the EU adopted a new digital strategy that has simplified tax rules, ended roaming charges and removed barriers to cross-border online content sales. But about half of its measures—like smoother flows of data—remain mere proposals.

In the 19th century, Europe was the first continent to industrialize, and institutions based on that experience have deeper roots there than elsewhere. Most European countries are still run by marmoreal Christian or social democrats descended from the struggle between bourgeoisie and workers. Their propensity for bold thinking is limited. European investors expect to be able to claim physical assets against their losses if a firm goes bust—bedevilling software startups that tend to lack them. Research is too often incremental, not radical. The burden of early industrialization is also something of a geographic tale. Europe’s traditional industrial heartlands are struggling to adapt to the new digital era, but those once on the periphery—Bavaria and Swabia in Germany, and cities like Helsinki, Tallinn, Cambridge, and Montpellier—are leading the way, without the institutional fetters of old factory towns like Liège.

The 20th century also restrains Europe’s technological competitiveness today. The collective experience of Nazi and Soviet surveillance and dictatorship makes many Europeans protective of their data (Germans, for example, are still reluctant to use electronic payments). Moreover, since 1945 the continent has mostly been at peace and protected by outsiders. So it has no institutions comparable to DARPA, the American military-research institution where technologies like microchips, GPS and the internet were born. Nor has it anything comparable to China’s military investments in technology today.

Published at: https://www.economist.com/europe/2018/10/13/europes-history-explains-why-it-will-never-produce-a-google

In Cockerill’s shadow

The equivalent historical forces in the 21st century could prove to be differing attitudes to migration. America’s technological superiority is built on its ability to attract talented, success-hungry people, one reason businesses resist Republican plans to limit legal immigration. Of the 98 high-tech firms in the Fortune 500, 45 (including Apple and Google) were founded by immigrants or their children. China lacks immigration but sends many of its young abroad to study, and then repatriates their skills. Europe does neither and treats migration as a threat, as its debates about how best to seal off the Mediterranean show.

If it wanted to, Europe could improve. Its governments and the EU could create a genuine digital single market, do more to promote enterprise and institutional innovation and make the most of its strengths in, for example, biomedicine and transport. Better integration of capital markets would help as well. Europe could harness the growing uncertainty about America’s trans-Atlantic security guarantees to invest serious cash in its own DARPA-equivalents. Europeans may even eventually come to view immigration as an opportunity. But all of this perhaps demands a greater awareness of history itself, of the diverging technological pasts and possible futures hovering over the continent like the bronze John Cockerill over the Place du Luxembourg.

This article appeared in the Europe section of the print edition under the headline”Waiting for Goodot” in Europe Oct 13th, 2018.

About giraffesoftechnology

Giraffes of Technology: The Making of the 21st-Century Leader is an upcoming book by Dr. Hubert Glover with Professor John Curry. Link to Amazon: http://www.amazon.com/Giraffes-Technology-Making-Twenty-First-Century-Leader/dp/1479349224/
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