This post is the second part of “A review of the concept of sovereignty and its application to the digital world”, which examined the concept of ‘sovereignty’ from a historical perspective and its ‘digital sovereignty’ aspect from a theoretical perspective. This second instalment aims to provide a practical application to the current reality that addresses the questions raised in the first post.
Before we begin, it is worth recalling the definition of sovereignty proposed on the basis of the analysis carried out in the previous instalment: “Digital sovereignty is understood as an extension of the sovereignty inherent to states, through which they have the capacity to ensure that activities and actors in the digital environment that impact the country’s economy or society comply with a set of rules, principles and standards.”
Furthermore, three challenges to the exercise of digital sovereignty were identified: (1) the intangibility of the digital world with the absence of defined borders, (2) the diversification of the value chain, and (3) the influence of large technology companies.
These concepts will form the basis upon which the responses will be developed.
To what extent is it truly possible to exercise digital sovereignty?
A state possesses digital sovereignty to the extent that it is capable of addressing the challenges inherent in its exercise.
Firstly, the intangibility of the digital world can be addressed by identifying digital services and products, and defining the country’s digital frontier as the use of these by its population. In this way, countries can extend their rules, principles and standards from the physical to the virtual world.
Secondly, to ensure compliance with countries’ regulatory and ethical frameworks throughout the value chain, mechanisms for oversight, traceability, transparency and certification are necessary. Furthermore, a cordial relationship and bilateral cooperation with other countries is desirable to convey the importance of compliance by their local companies without eroding the country’s own sovereignty.
Finally, it is possible to resist pressure from big tech companies and hold them accountable in the same way as other companies operating in the country.
However, countries will only have the capacity to address these challenges if they possess strategic autonomy. A dependent state does not have full decision-making capacity over its policy and regulation, as it is vulnerable to the decisions of the countries on which it depends. Consequently, the scope of digital sovereignty depends on the degree of digital autonomy the country possesses.
Does the European Union have the capacity to exercise full digital sovereignty?
It should be noted that the European Union, as a supranational entity, does not possess full sovereignty. Its sovereignty consists of the partial transfer of sovereignty from its member states, which includes its extension to the digital sphere. Therefore, it does not have the full capacity to establish rules, principles and standards governing the digital environment of its member states.
Furthermore, the European Union lacks sufficient strategic autonomy to address the challenges of exercising digital sovereignty. The study “Assessment of Open Strategic Autonomy” published in 2024 by the European Commission’s Joint Research Centre highlights Europe’s lack of autonomy, particularly in the digital sphere in terms of the economy and innovation.
Of the eleven key enabling technologies for the digital age, Europe is net independent in only three (robotics, renewable energy and energy-saving technologies). In the remaining eight, which include critical technologies such as artificial intelligence and Big Data, net external dependence exceeds 50%.
Another publication painting a bleak picture of the continent’s strategic digital autonomy is the report “EuroStack – A European alternative for digital sovereignty”. It includes data illustrating Europe’s dependence on technologies1 and raw materials2; the investment gap3; the lack of technological ‘champions’4; and the difficulty in scaling up and sustaining innovation5.
Consequently, given its supranational nature and the region’s limited strategic autonomy, the European Union lacks the capacity to exercise full digital sovereignty. To move from partial to full exercise, the European Union would require greater delegation of power from Member States and complete strategic autonomy (open, with like-minded countries that share its principles and values).
Can Europe achieve digital strategic autonomy?
If it plays its cards right, Europe has the capacity to achieve digital strategic autonomy. That is to say, autonomy in areas critical to European innovation, resilience and security, alongside open cooperation in other fields with allied countries.
However, it must be borne in mind that this quest for strategic autonomy, particularly in the digital sphere, is taking place at a challenging time of shifting global power dynamics. Two possible outcomes are on the table: a bipolar world or a multipolar world.
In the bipolar scenario, with the United States and China at the helm, the world would be organised around two rival blocs in an atmosphere of intense competition. In the multipolar scenario, the world would be divided into various spheres of influence guided by the ‘soft laws’ of international institutions.
However, these spheres of influence would differ from those that emerged after the Second World War. The Western-centric model that emerged in the mid-20th century no longer applies today. The ‘Global South’ carries greater weight on the international stage, so the new multipolar structure should reflect the influence of the key players from these regions.
The greater the strategic autonomy, the greater Europe’s influence will be in defining the poles. However, at the same time, in a period of competition between regions, it is more difficult to achieve greater strategic autonomy. In this regard, Europe must adjust its course to navigate the turbulent international waters. This adjustment should be underpinned by levers such as (1) agility in political and regulatory decision-making, (2) the strengthening of the Single Market, and (3) the creation of large European companies capable of competing in the global market.
1. Since 2017, 70% of foundational AI models have been developed in the United States and 15% in China.
Europe manufactures only 9% of microchips, but consumes approximately 20%.
70% of the European cloud computing market (IaaS) is dominated by US companies, whilst Europe’s largest cloud provider barely reaches a 2% market share.
2. China controls around 90% of global rare-earth refining capacity, including key resources for batteries and semiconductors such as lithium, cobalt, nickel and gallium, amongst others.
3. Companies in the European Union account for just 7% of global R&D spending on software and internet technologies, compared to 71% for US companies and 15% for Chinese firms.
(Additional data from Connect Europe’s ‘State of Digital Communications’ report: Europe invests €118 per capita, well below the US (€217), Japan (€173) or South Korea (€151).)
4. Of the world’s top 50 technology companies, only four are European, and none of them were founded in the last 50 years.
5. Between 2008 and 2021, almost 30% of European ‘unicorns’ relocated their headquarters abroad, mainly to the United States, highlighting the structural barriers to retaining high-growth companies.
Non-EU entities account for 19% of global acquisitions of EU companies’ digital platforms, whilst EU residents acquire only 6% of companies outside the bloc.
