Welcome, everyone, to this panel here at the World Economic Forum on the question of whether European tech sovereignty is feasible. I have a fantastic panel with me from great public and private sector institutions. So I’m going to very briefly introduce them.

Henna Virkkunen, of course, is the Executive Vice President for Tech Sovereignty. Same name as this panel, Security and Democracy of the European Commission. Then we have Christian Klein, the Chief Executive Officer of SAP, the largest software company in Europe and one of the largest in the world, founded in the early 1980s, I believe.

We have Jessica Rosencrantz, the Minister for European Union Affairs of Sweden. We have Aiman Ezzat, the Chief Executive Officer of Capgemini, the French multinational information technology company. And finally, we have Mati Staniszewski, who is the CEO of Eleven Labs.

Now, maybe I should say one sentence about Eleven Labs. It’s marginally less well-known than the others. It’s a software company that specialises in natural-sounding speech, which he co-founded with Piotr Dabkowski in 2022.

And it’s best known for its AI-based text-to-speech generator. And so Forbes wrote about this in an article that I looked up just before coming here. Out of the gate, the new AI text-to-speech generator was leagues better than the robotic voices of Apple’s Siri and Amazon’s Alexa.

So here we go. So the way that it’s going to work is I basically want to focus on two aspects. The first one, which is the main one, is tech as a motor of economic growth, right?

So tech sovereignty in this case just means we want more European tech. Why do we want it? Because by some measures, ICT accounts for…

the full growth, productivity growth differential between Europe and the US. Now, importantly, a lot of this is about adoption of ICT, not just about creation, but there is a close link between homegrown innovation and creation and adoption. The second sense in which I would discuss the theme is how to make Europe more sovereign in tech in the sense of making it more autonomous and less dependent, particularly on the United States and potentially other foreign powers that might turn against Europe.

So this, if you like, falls a little bit under the bracket of economic security. Now, the reason why I think it’s important to elucidate both is because the relationship between the two is not entirely obvious. Of course, if we have a much stronger homegrown tech sector, we also become less dependent.

But, you know, given the sector that we have, attempts to increase economic security might actually set us back because international integration is an important force of dynamism and economic growth. So I will take about 30 minutes to discuss this topic with the panel. And then I hope we can have about 10 minutes for questions and answers, which we are going to pool, right?

So those are the ground rules. I’m going to start with the private sector because I want the public sector to respond, in a sense. So let’s go with the doyen in the group, Aiman Ezzat.

So in your view, what are the barriers holding back tech innovation, but particularly the scale-up of tech companies, of young tech companies in Europe? And relatedly, what are the sorts of actions that you would like to see from EU institutions and governments? Are they about better structural conditions?

And so, which, I said, about public money? Go ahead.

Thank you. So thank you for having me on the panel. Of course, I think we have progressed a lot in Europe first in terms of making that happen.

You know, we have seen ecosystem of startups improving quite a bit in the last few years. We have seen, you know, funding coming. There is regulation, there is advanced regulation, I come back to it.

So there is an environment and there start to be public money, but also developing as well the VC part to be able, you know, to fund this innovation. Some of the challenges is really around the fragmentation, the reality Europe when it comes from some rules and regulation is not uniform completely. You know, there are different countries with different constraints.

Usually when you see even startups, they don’t think European, they think in their country first and they start to, you know, take shape in their country before they think about going. If you are in the US, you immediately look at the US market. Why is that happening?

Because it’s complicated actually to work across borders. It’s not yet very simple, I think, in the tech world to work across borders. Another aspect is around the funding.

You know, sometimes there is funding, but the funding is linked to one country and this country wants you to set up everything and hire resources and do the growth in the country where the funding is coming from, which again is not.

So what most, I say, startup would be lacking to really be able to do that is have something which is really European, that the funding is European, they can operate the way they want, that we take the constraints they have, that the regulation is uniform.

So they really can take advantage of the fact that we have a 450 million, you know, consumer market to take advantage of. But today this is not the way they perceive it, right?

Can I maybe just follow up? So the point on fragmentation of product markets, right, where you want to sell your goods, that’s very obvious. The point on fragmentation of funding is a little less obvious because we usually think of capital as being mobile across borders, particularly private capital.

Yeah, but sometimes the funding comes, so we announce a funding program at the European level, but then the funding comes from the different countries. And then the country that’s providing the funding insists the fact that you have to set up…

If it’s public funding initially, right?

Yes. That it has to come from the country where you have, which I understand, you know, the national interest in terms of making something like that. These are elements.

I’m not saying it’s just one way. They just pile up, you know, in terms of thing. And then, of course, you know, the capital market side to be able to do IPO, to be able to do scale-ups, et cetera, is still not the same as it is in the U.S., right?

And there’s a bit of risk aversion as well, I think, compared to U.S. market. I mean, Americans love growth.

In Europe, people want to make sure that the profit is going to turn, right? In the U.S., you can grow by 25%, not making any money for 10 years. Everybody’s okay with that.

In Europe, within two years, people say, okay, no, I cannot keep investing if I can, you know. And you have all these elements. Some of them are cultural.

We’re fighting against. The last point I’d like to go a little bit, and I did have some discussion with Commissioner Verkonen around it previously, is really around regulation, right? And here, really, I’m thinking about what we’re doing around AI.

I think regulation is good, and I think we had the discussion, the fact that it’s better to have a European regulation that every country tries to do its own. So fully supportive of that. The question is the extent to which we regulate, okay?

And especially around AI, the question is that we are regulating a bit too early, and it’s too comprehensive compared to the evolution of the technology, right? It’s an evolving technology. It’s new.

And we went a little bit too far, and especially we start touching the regulation of technology. And for me, if you regulate technology, you kill innovation. So you regulate the use of technology, but you have to try to avoid the regulation of technology, okay, to make sure that you foster innovation and people don’t start to be afraid of saying, okay, if that’s the case, I’m going to go and do it somewhere else.

That’s what we want to avoid. So all full regulation. but maybe in a bit different way and maybe at a smaller scale initially.

Yeah, we’ll get back to how that could be done. So, Mati, we would like to think of you as a Polish startup or young firm, but you’re headquartered in London. The forum, by the way, lists you as Mati Staniszewski USA.

And I think most of your initial funding came from US venture capital. So, can you sort of make sense of this for us? You know, does any of this suggest a problem with Europe?

And what problem is it?

First of all, thanks for having me here and welcome, everyone. I feel that the thing what Aiman said about how we thought about starting 11LAPS, which is building globally from the start, and maybe that’s represented with all the countries that you mentioned, where when we started the company, it was very clearly, we wanted to serve it across borders.

And we as founders, it’s me and my co-founder, we are both Polish. And the inspiration couldn’t come anywhere else than from Europe. It’s a very peculiar thing.

If you watch a foreign movie in a Polish language, all the voices, whether it’s male, female, any character of the voice is narrated with one single character. So, one voice narrating the whole movie. And that’s what was the initial inspiration, where we knew that the future will look different, where you can cross borders, you can have the original emotions and intonation with that kind of European spirit across languages and make this possible.

The very first initial capital came from some partners in Europe. But then as we started scaling, the pockets were deeper in US and we needed to bring US investors on board to really help us with that second layer of building and scaling in the second stage. And I think the second piece of why we went that route and something that is now, I’m hoping, increasingly across generations we’ll see is as you scale from a million to 100 million, I think across Europe you have a great support, a lot of people that have scaled companies this way.

As you scale from 100 million to a billion or 10 billion… That pool of people that have seen that journey is a lot smaller. In the US, it’s bigger.

Of course, now we are forming DECOSYM in Sweden. I’m looking to Christian, who’s scaled an incredible company, and we hope to follow that path too. But these are ultimately the people that we hope to learn from on how to go through that second layer.

And hopefully, by creating some of the ecosystem around and sharing that knowledge, that will help other companies grow globally from the start.

I mean, I agree, Christian is fantastic, but his company was pretty scaled before he took over, actually, I think. Thanks for the reminder. Which brings me actually to Christian.

So, you know, you basically run the tech champion of Europe. And like other large tech players, I would say almost all large EU tech players, it’s a relatively old company, right? It’s almost 50 years old.

And we have tech players in Europe that are 150 years old. And so, this begs two questions. So, you are, in a sense, the only successful European tech company that’s part of this generation of founders in the 70s and 80s, together with Apple, Google, Oracle, and others.

You are the only ones that were present in that moment, that historic moment, and made it. And the other question is, you know, why hasn’t it happened since? So, how could you pull it off when no one else did?

And why has there not been a comparable entry and growth in Europe in the meantime? What would we need to change to enable a new SAP?

Let me start with the private sector, because it’s always important to look into your own house before you move to the public sector. I mean, look at SAP. When SAP was founded, there were five people who had an idea.

And they went out to a customer, had no clue about financial accounting. They just know how to code a software. but they went to the customer and wanted to understand the business problem.

And this is how they start coding our ERP, who actually is carrying the company until today. And they took an unbelievable amount of risk, and I said to Mati, I admire him for, you know, such a young person taking the risk, you know, building an own company, and we need entrepreneurs like that.

And I also agree with Aiman, you know, the risk-taking culture sometimes in other places in the world is maybe a little bit more expanded than here. And the other one is, of course, look at SAP. When I started my gig as CEO four years back, and we went into the cloud transformation, we have 110,000 people and 40,000 people are new to SAP.

Now you can criticize sometimes, you know, the consequences which comes with that, but we could not have transformed the complete business model of SAP with also now bringing new people in, with also acquiring new people.

And this is also sometimes very important now with AI. I mean, Microsoft placed a big bet on OpenAI and they took a big risk, but it was at the end very rewarding. And this is something what we as business leaders, we cannot sit here and say, oh, I have a good running business SAP, because at the end, I also know with AI, again, my business model is changing again.

So I tell my product managers, you get better hectare out of there to the customers and understand how we run the supply chains in the future with AI. How can we help them better to understand the consumer trends? Because you will not learn this inside the company.

We have to relearn how AI will change the economy. And then second part, obviously, I speak a lot to young founders in Europe. And a lot of times US investors come in and say, please move to the US.

And I think it’s not new. And that, by the way, also goes both to the private and the public sector. There is one market, you have scale.

You can hire people and they start in two weeks. When you hire a good developer in Germany, it takes you four months. that matters in a world which is moving so fast, especially in AI.

Then you have, of course, the regulation, we know that. So it’s very, very important that we are giving them the access to capital, but also giving them a market to scale. And I’m all in for Europe, but we really need to form this digital union, which is so important.

It’s money and it’s scale and it’s speed. And, I mean, there is not a lack of talent, there is not a lack of data in Europe. We have a lot of ingredients, so we should not, you know, talk ourselves into a depression or, you know, close to being suicidal.

No, we have a lot of strong assets and we know what we have to do. But I feel what is very important these days is leadership.

But maybe just to get back to the, you know, you helping me solve the SAP puzzle, so to speak, all these conditions were even worse, possibly with the exception of regulation, in the scaling phase of SAP.

So how should I think of SAP as sort of the one exception that proves the rule, in the sense that it was only one company that really made it? Or is there an SAP secret sauce that you can share with founders today of how to scale globally in spite of the imperfections of the single market?

Yeah, I would say sometimes here in Europe, I mean, here in Davos, we talk a lot about digital taxes, about regulation. Sometimes in the US, they are talking about the chances, the opportunities, and we also as well. Again, we have a lot of ingredients.

I feel we’re going to see some SAPs coming in Europe because they also understand, oh, we should not try to become the next hyperscaler, but is this really so important for us? No, we have other strengths. In Europe, we have strong industries, we have a lot of data, and we need to see how can we apply AI to be the world’s leader in life science, to be the world’s leader in manufacturing.

Because we can’t compete everywhere in Europe on energy, on labor costs, that is why it’s even more important. that we now need to play a different game. And we need to play a game where Europe has a lot of trends.

And when we as business leaders and as political leaders give these young startups the framework they need, I mean, there will be more SAPs. And the game is not played on applied AI. And this is, I guess, where Europe has still a lot of chances.

Right. We’ll come back to that point, what is actually our comparative advantage. But I want to go to Jessica first.

So Jessica, of course, is here for many reasons. But one of the reasons why you’re here is because Sweden is, in fact, the only advanced country in Europe where productivity growth, after the historic moment where we diverged from the US, the US kept growing and we went slower.

Sweden was actually the only country that just kept going with the US. It has roughly the same productivity growth since the late 2000s as the US. I shouldn’t say the only European country.

I should say the only advanced European countries. We have tons of European countries that grow faster than the US, particularly Poland, Lithuania, many others. But they are all emerging markets or were emerging markets.

So Sweden is really an outlier. And so basically my question is, how much of this do you think is due to tech-related adoption or innovation? And if so, what has Sweden gotten right to produce that environment in spite of the fact that we didn’t have a capital markets union, that we still had all these problems with scaling?

It’s sort of like an SAP-related question, right? Again, Sweden shows that all this good stuff, which I completely agree with, may not be strictly necessary if other things are there. What are these other things?

So, I mean, first of all, I think we’ve spent a lot of time during the past year to, on your point, talking quite badly about ourselves in Europe. And I think we have a lot of things going for ourselves. I mean, we’re the world’s second largest economy.

If we were to make full use of the single market, we could really take advantage of our own size. We stand for values that we know create growth and prosperity. And we’re a partner that many other countries want to trade and cooperate with.

So we have a lot of things going for us, but we also have a lot of things to do, of course. And I would say that some things that we need to do, we need to do on EU level, and some things we can do on a national level. And to your point on national issues, I mean, I can’t tell you the exact recipe, speaking about recipes or, you know, whatever.

But what I do know is that we have a strong, you know, startup scene. We have a lot of innovative companies in Sweden, which makes me very proud, of course. I would say it’s a mix of, of course, really good companies, curiosity.

But one thing really, I would say, stands out, and that is actually the capital situation. Stockholm is called the capital of capital quite recently in one of our large international newspapers. And we have a, it’s almost like a hobby for people to invest in stocks and funds.

And it’s so natural, you know, I hardly think about it as a Swede. I just know that four out of ten Swedes have an investment savings account. They invest in stocks and funds.

Ninety percent of a private person’s savings go into something other than just a bank account. So I would say that’s one secret to how you get the capital. Because there is money, there is capital, but it’s not invested.

So one would be that, how to really mobilize private capital. One thing, the investment savings accounts. And then we have the pension funds also investing really heavily in new industries and companies.

So one secret, I would say, would be the capital market. And that’s something to learn from, I think, for Europe. Because what we are stressing, and I’m stressing when I meet my colleagues, is that don’t blame everything on the EU.

I mean, EU can do some things. We’re talking a lot about now on capital markets about regulation, harmonized supervision. And, you know, the discussion tends to be, should it be in Paris or somewhere else?

But before you have regulation or harmonization of supervision, you need to actually have the capital markets. So to that point, I would say that, you know, don’t hide behind the EU. We need to do things there as well.

But we really need to have national reforms. So now when we move forward, I think we need to look at best practices. And I’m sure there are many other good examples from other countries.

But if we can do that, we also need to address what I think, you know, the main challenges for EU, and I touched upon it. It’s the single market. I mean, it’s supposed to be our unique selling point.

But when I talk to companies, it’s quite often I get the answer that… Yeah, we have the single market, you know, theoretically, but then we still need to have 27 different ways of adopting things. And I know the IMF did a survey on this, and we have the barriers on the single market correspond to tariffs on goods for around 40% and above 100 on services.

So we have a lot to do. And simplification and capital markets. If we get that right, I think we can do this.

Before we go to the European level, and hence to Henna, just on this sort of investment culture, where does this come from? Because, you know, culturally, you’re not so different than half of Germany with this Protestant tradition, in part because you colonized us for a while. And so we got it from you.

A long time ago. I can assure you, we do not have, until very recently, maybe, that sort of spirit. Was it always there, or was it something that Sweden created, in some sense, maybe through policy?

I don’t think, I mean, if you would ask, like, how is a typical Swede? I don’t think the answer you would get is that we’re very pro-risk. Exactly.

Yeah, we’re quite the opposite, you know, sometimes. Yeah, a bit mindful. But I would say, I mean, in part, we did a lot of the structural reforms that we now can benefit from.

I mean, the whole restructuring of the pension reform. We did that when we were in a severe budget crisis in the 90s. And we did a complete remake of the entire pension system.

The investment savings accounts, say they’re 15-year-old or something. I mean, we sort of built reform by reform to make this happen, I would say.

But, yeah. Got it. Okay.

Henna, so you are in the unenviable position of being here as sort of the omnipotent European policymaker. At least this is your assigned role. So, you know, I would be shocked if you disagreed with the points on the single market that have been made.

Can you maybe comment on some of the other points, including the less comfortable ones like regulation? So, what is your take? And particularly what can be done at the European level?

and then break it down for us, you know, commission versus others, you know. There’s also a nasty little thing called the council, by the way, and not to mention the parliament, which just, you know, kicked Mercosur into the high grass. So, go ahead, please.

Yeah, thank you very much. I would like to comment, of course, everything, but I try to be very brief here. So, first, I would like to say, of course, that I see that Europe is having everything what is needed to be competitive, and many of the strengths were mentioned here.

So, for example, when it comes to technologies, we have thousands of startups who are developing and training AI, for example. We have very strong science and research and also very strong industrial basis. But then we are also, we have identified these problems that, for example, our startups, they have difficulties to scale up their businesses in Europe.

So, often our startups, we have annually quite similar number of startups established in the European Union than in USA. But when we look scale ups, only 8% in Europe and 60% in USA. So, it tells clearly that our startups still, they have to move to USA to scale up their businesses.

And really the major obstacles were mentioned here. So, two fragmented markets. So, we have to really create one single market and then access to capital and, of course, overall regulatory environment.

So, we have to simplify the things. We have to make Europe faster and easier for the businesses. And often when we speak innovative companies, they have often also very innovative products and authorization processes in Europe.

They can be very lengthy if you have new kind of materials or products to enter to the markets. So, clearly we have to make Europe faster, easier, simpler for the businesses overall. So, I think it’s the most important thing to where we are focusing.

When it comes to digital roles, I’m working very much on this field. And from my perspective, it’s very important that we have in digital field only regulations. Because earlier we had often directives.

And directive means that all the member states, they are implementing in different manner. So, just yesterday, I published our new telecom regulation. and we were combining four different telecom legislations under one regulation.

So we were simplifying and harmonizing the things to make Europe faster, easier for the businesses and creating single market. Also when it comes to data, just in November we were publishing our digital simplification package. We had four different legislations on data and we were combining everything under Data Act.

Now it’s very clear when it comes to data, all the personal data under GDPR, all non-personal data under Data Act. So we have been very much now simplifying our digital rulebook and I’m continuing on that. But like it was said, it’s not only about our digital rules, we are also carrying now so-called digital fitness check and I’m very much welcoming of course your ideas that to where we should focus next.

But then like it was said, when it comes to taxation, to labor laws, it’s more challenging because it’s competence of the member states. Here we are now preparing our so-called 28 regime for innovative companies that they could operate under one legislative rules in the European Union. But like Jessica said, creating capital markets union, we are doing our best in the European Union level.

But for example, taxation is playing a very important role here, that how the member states are really encouraging citizens to invest. Because in the European Union, we have 33 trillion euros on the saving accounts. So our households, they have more than double of European GDP on saving accounts.

And we have to really create incentives for that, that they would like to invest like Swedish citizens are doing.

Maybe to get back to a point that I think you made, Eman, on AI regulation. So that certainly is something that is happening at the European level. And I think there is sort of a persuasive case to say that when you have an area that is developing very fast and you do not have a good sense either.

of where the next productivity-enhancing innovation will be, nor do you have a very good sense of the unintended consequences and risks. Maybe it’s not such a great idea to regulate ex ante before these things develop, but maybe a better approach is possibly something that arguably is akin to the American approach, which is you let them do whatever they want, but you have a very close supervision based on some very high-level principles of doing no harm.

And then you sort of catch them exposed if something goes wrong. That would require a complete change in regulatory philosophy as far as AI is concerned. Would you have sympathies for such an approach?

Because the simplification that’s happening under the Obamacare bills and in the revamping and the application of the AI doesn’t go there at all, right? It is very much within the traditional regulatory philosophy.

I understand very much, of course, this comment. But then we are again in this situation, like it was mentioned here, that it’s better to have one European legislation than 27 different. And the challenge in the European level is that if we are not coming quite early with our European rules, then our member states, they start to already establish their own rules.

And that’s why the European Union came quite early with the AI Act. But I think that it’s important also to have that kind of risk-based approach, that clearly where we see that there’s more risk, there’s more rules. But most of the cases on AI, it’s very low risk or no risk.

So it’s mainly about the high-risk user cases and about really the safety, security, transparency of the systems. So I see also that we shouldn’t regulate the technologies, but it’s more about the principles that the developers and the service providers, they have to make sure that they have the practices in place when it comes to safety and security of the systems, for example.

But with the USA, also for them… It’s not so black and white that USA is not like having any rules there. Of course, often they are coming with the court cases, so they have a different system there.

But Stanford University was quite recently also counting that now on the state level there is more than 200 different regulations on AI. Even that on the federal level, there is not that kind of…

That’s a fair point. And in some sense, that’s what EU regulations are trying to avoid, like you said. Okay, so I’m going to ask now about strategic autonomy, essentially.

And this time, I’ll start with the public sector. But to allow you to catch your breath, I’m going to initially ask Jessica. So basically, there are two motivations, I think, to think of this as a separate problem.

One is that even with perfect policies, it will just take time to grow in the EU tech sector. And in the meantime, we’re going to be highly dependent on US tech. And this dependence could be abused.

The other more fundamental thing is that even if we have a wonderful tech sector… I’m one of those old-fashioned economists that believes in trade and comparative advantage and specialization. We’re still going to have some US companies who are just the best globally at what they do.

And then there will be EU companies that are the best. And so specialization automatically brings dependence. And so how do we manage this dependence?

How do we reduce the security implications of dependence while maintaining the benefits of integration? It’s a really hard problem to solve. As a liberal Swede, do you have any ideas for how to do that?

Well, if you’re old-fashioned, then I am as well, because I also believe in trade and working together. And that’s why I almost cried the other day when the European Parliament voted against the Mercosur agreement. But we’ll see what happens.

But I agree also in this issue that we need continued openness towards other parts of the world. I mean, I would like to stress that… Too much dependency on one country or one company always poses risks Independently what country that company is coming from, you know So I think we have to have a we can’t be naive in that sense that we need to grow a more of European digital competitiveness and and Well call it sovereignty or what you want to call it, but basically I want real good European actors to be strong in this field But then I think we have to in all our dependencies Look, what is critical?

It goes from rare earths to other components in the digital area and perhaps there we need to be extra mindful In this little garden and have very high fences when it comes to that But but but my point will be when we are creating this European competitiveness and strength We still need to maintain an open manner because our focus should not be at excluding the best ones It should be about creating the best ones ourselves That may sound naive and I’m not naive because I think we need to see the dependencies as well But our focus should be there because building walls or you know Shutting actors out.

I don’t think we’ll build wealth or prosperity in Europe But I mean we’re looking into a new cloud policy in Sweden. I know you have, you know similar processes in the EU So, of course here we have to see where do we have critical dependencies that we have to to to handle but but basically I mean Our companies if they are going to be the best they need the best technology And then we can’t afford to shut the best ones out, right?

And maybe the solution is to create mutual dependency also. Ayman, what’s what’s your take on the same question of how to reconcile integration and

Just rebound on the first thing I’d like to put us back in the tech sector as Capgemini and one of the global players and we also were born in 1967 and grew up as an entrepreneur. You’re even older than SAP. And then a few others like Etc.

So I just want to say there are global players. Yes. Yes the tech sector.

I was talking about market cap. Go ahead. Listen, I think we need to find the right balance.

I’m all for sovereignty because overdependency creates an exposure and a risk. I had discussions with chief technology officers of large companies in Europe where they say, how can I ensure business continuity? The reality, we have huge amount of dependency on U.S.

technology today. It’s not just about the cloud, we talk about the cloud. We let go of all our hardware players.

I mean, I’m old enough to remember Olivetti and ICL and Buhl, they are gone. We did not invest early enough in the cloud to be able to create European cloud player. Why?

Because it requires very heavy capital investment. And there were not many companies that had basically the, able to kind of put up the money up front to be able to create the scale, you know, to become cloud players. But we have to be careful about the discourse around sovereignty.

Why? Because we have to remember that we want to have competitive companies in Europe, and you talked about it. And one of the big thing coming out of the Draghi report is that in Europe, part of the drop in productivity compared to the U.S., or at least the divergence, is due to the lack of technology adoption.

So if you put things in place between regulation and sovereignty that slow down technology adoption, we’re going to further deplete the competitiveness of European industry. So we have to go for technology adoption as fast as possible. And yes, at some time, it’s going to be at the expense of sovereignty.

And at the same time, trying to find where we can build sovereignty. And remember, sovereignty is not one more little thing. It’s not either we have or we don’t have.

It’s around data, and this is where we have to protect and we have to ensure 100% sovereignty. It’s around operations, and we can force many of these tech players to ensure that we have, you know, sovereignty around operation. On the technology stack, it’s going to be more challenging.

and here where we have to do the compromise, and then we have regulation, right? So it’s not one thing. There’s the four layers and we can control three out of the four.

On the technology side, we’re going to have to make the compromise while we’re trying at the same time to build our own stack in some places.

I’m going to come back to the question of data in a second, and I will ask you about a question. But before that, just to finish up on this issue of security. So there’s a theoretical idea which has a lot of appeal to economists to think in terms of commitment and commitment devices, which is that you might be able to strike deals with US-based tech companies that embody a technological commitment device not to shut down their services, make them unable to shut down their services, even if they come under the pressure from their government, right?

So you used to work for Palantir, I think, so lots of European security agencies rely on Palantir software. The theoretical idea is that somehow Palantir develops a technology solution which throws away the key to the existence of the service or hands the key to the customer, and it cannot be taken away by Palantir, even if Palantir comes under the pressure of the US government.

Is something like that science fiction? I mean, you guys are so creative in finding technological solutions. Is this a feasible idea?

The quick answer is yes, it’s feasible. You can delineate the platform and the infrastructure from how that platform is applied and how the data is used and transferred. From our perspective, as we think about tech sovereignty, there’s, of course, those multiple layers.

There’s the energy, there’s the compute, there’s the foundational research and models, and then there’s how do you actually apply those models in production, in the companies, in the governments. And from our perspective, as we think about the field, on the foundational research side, we should stay close. There are still multiple solutions, so collaboration and working for global solution is the best way to go.

However, Mistral is doing great on the LM side, Black Forest Labs on visual side. We are leading on the audio side. So I think still staying close and having that alternative is important.

But then where we can flourish, and that’s where I would put the attention and go further and faster ahead, is the application of using the data on top of those models and the wider citizen support that we can offer of how that is deployed.

I recently had a pleasure to… We have a pleasure of announcing our work with government of Ukraine, where we are creating the first agentic state. And we traveled there, and despite everything that’s happening, the people were clearly deeply passionate of making this possible, working across all of the ministries, and deploying effectively a solution where they have a central app that all citizens can access and whether that’s help with the benefits, help with education, help with what’s happening on the front lines.

You can access that across with their own data secured, with their own variations of the models. And that was like a phenomenal framework where they’ve been able to use the network they’ve already set up to deliver that. And as I think about other industries, another industry that I think hasn’t been mentioned is the healthcare industry, where across Europe, so many countries benefit from the National Health Service support.

Similarly, froth of data that can be used to create models for European benefit and prosperity.

You’re actually a beautiful segue to the final topic I wanted to ask about, and I wanted to ask you about a question. So data is, of course, a super important production factor in IT generally, specifically in AI. We do have these hang-ups about privacy in Europe.

How can we reconcile them? And to what extent do you see sort of feasible reform happening? I am a researcher, right?

So I am also very frustrated about access to just regular databases as a researcher. Clearly, there must be a way of doing it better without completely throwing away our preferences for privacy.

I mean, first, looking at data, but also looking at sovereignty overall, I mean, SAP wants big parts of the U.S. economy and big parts of the public sector, very mission-critical parts of the sector. And I’ve never heard a U.S.

government member saying, are you Europe or are you U.S.? No, they give us clear rules what sovereignty means, and we need to adhere to that. I think sometimes in Europe, we take the sovereignty topic very emotionally, maybe too emotionally, because again, a piece of hardware from the U.S.

will be always included in a tech stack, that’s for sure. Now, we have to sometimes also admit, is this now a mission-critical thing for the sovereignty of Europe? I can port any ERP from one infrastructure to another infrastructure in four weeks.

I cannot port a customer from an SAP supply chain software running mission-critical manufacturing in four weeks from one system to another. So what I want to say with that is, we need to spend more time on indeed having better access to data and really playing a game which the U.S. and China have not yet played.

And again, I’m coming back to the topic around applied AI. Why can we not be the best on using the infrastructure to scale what we now have in being the best in cancer research and health care? Why can we not be the best in really researching for the next best truck so that actually the European life science companies are leading worldwide when it comes to accelerating the speed of how to do research and delivering trucks which help to save lives?

And now we could continue industry by industry. And for that, data access is key. And I can tell you, and that’s why with HANA and the European Commission, but also on the national level, we are working so hard to also make sure that we have better access to data.

I can remember the early days when we wanted to use, start using… data to train our machine learning modules. I asked my data protection officer, can I use this and this, and I always get a no.

I said, what is the time when you say yes? Because I need a solution that SAP stays competitive. There are so many regulations layer over layer, and it’s not about that Europe regulates.

I’m actually all in for that Europe, we need one layer of regulation also for the data access, but we don’t need layer over layer. This could have been the German layer. That is a German layer, and so that was the German layer.

And then again, sometimes people also tell me, bring over some people from the US and ask them how they do this with using the data to train your machine learning, to train your LLM modules now going forward.

And I guess this is something what is definitely key, and these are the topics we really need to focus about because Europe has, again, a lot of strengths, and strengths, one strength is we have a lot of data and industry expertise.

And that is the next game what we have to play, and this game, we should better win because otherwise we are losing in industries, we better don’t lose because otherwise, there’s the economy in Europe where we already see some trends which are not so encouraging, that trend will continue.

And the data part is super, super key to that.

I completely agree. So you will have a chance at the very end, but I do want to bring in just a couple of questions in case there are. Gentleman over there, please rise and introduce yourself.

The lady in front, I think that’s all we can do. Or the third one, quick, yes.

Chairman, World Quant Foundry Venture. Europe currently invests about 0.2% of its GDP in venture capital. The US is around 1%.

China works very differently, but the state R&D budgets are about 2.5%, 3%. This to me is a critical difference. Do you think Europe is going to remedy this?

Okay, thank you. The lady in front here, please stand up and. Introduce yourself.

Isabel Hartung, Advisory Board of ThyssenKrupp Elevator. I’m very happy to hear a more differentiated view on sovereignty. I heard a lot of, you know, it’s like we absolutely have to go to be sovereign in whatever dimensions.

And still sovereignty, I heard, is important in some aspects for you. And I’m just wondering, because it comes often with a cost. I’m just wondering where is your top priority and maybe kind of, you know, you can just give me one or two answers where you say there we need to be sovereign because of…

Right. Got the question.

And finally, the gentleman over here, quickly. Introduce yourself, Kennedy. Hello.

My name is Stefan Reuter. I’m from CopaData. I’m representing a European software unicorn.

I hear a lot about having a single market. What I see is quite the contrary when it comes to, for example, the machine regulation, which is coming in place, which forces machine builders, which is, I would say, an industry which we can be quite proud of, forces machine builders to provide the manuals like 27 languages in the European Union.

And it complicates just business.

Okay. So what we do is, Hanna, if you could address this question and maybe the initial one on the R&D budget, whether it’s large enough. And then sovereignty, if you want to say something and if anyone wants to chip in, but it has to be very quick.

I would like to really comment to sovereignty because, like you said, it’s my title and I haven’t been able to comment. Go for it. What does it mean when we are speaking about technological sovereignty?

Europe has been always, of course, as you know, very open for global investors and our businesses, our industry, we have very long global value chains. But now we can also use that in nowadays world, we can see that these can be also, these dependencies, they can be weaponized against us. And that’s why it’s so important that we are not dependent on one country or one company when it comes to some very critical fields of our economy or society.

and that’s why we are there diversifying of things and also looking that where we have to have our own certain capacity. Especially we are now working on AI, on semiconductors, on quantum computing, also with cyber security technologies to be sure that we have also our own capacity in this sector, but in the same time we want to work with our like-minded partners.

So, technological sovereignty plus means that…

Is the U.S. a like-minded partner?

The U.S. has been, of course, historically our most important partner when it comes to security and technology. We have also other partnerships, for example, in digitalization with Japan, Korea, Canada, so on.

But in the same time when we have to have certain capacity ourselves, it’s important to have partnerships because we see that nobody can’t be competitive alone. So, technological sovereignty means that we can always choose with who and how we are operating, that we are not forced to one solution.

I’m afraid we are out of time. The two questions that did not get fully answered can get answered now privately. Thank you so much.

I think it’s been a great panel. A round of applause. Thank you.