For years, discussions about the European Union's (EU) technology sector have tended to focus on what it lacks. Investment. Scale. Speed. The conversation often begins with Europe's weaknesses and ends with comparisons to the United States (US).
Yet beneath the headlines, a different story has been unfolding.
- Recent data suggests that more technology professionals are moving from the US to Europe than in the opposite direction.
- The EU's technology sector has become an increasingly important contributor to the economy. In 2023, it generated more than €816 billion in value added, representing 5.24% of the EU's total gross value added (GVA).
- Between 2015 and 2025, the number of funded tech companies in the EU increased from 13,000 to 40,000.
- Venture investment in European defense tech reached €2.5 billion in 2025, more than 10-fold since 2020. For comparison, venture investments into US-based defense tech startups totaled approximately $38 billion through the first half of 2025.
- Over the past decade, the number of ICT specialists in the EU increased by 59.4%, more than 6 times the increase (9.8%) in total employment.
- In 2025, after three consecutive years of declining investment, the European venture capital market showed signs of recovery with €66.2 billion invested. Approximately 36% of European VC funding went to tech companies that year, up from just 19% in 2021.
These statistics do not put the EU on equal footing with the US. However, they reflect a gradual shift in investor confidence. Although Europe lags behind the US and China in terms of overall size, its technology ecosystem is growing in ways that warrant closer attention.
The Sovereignty Debate
Over the past year, discussions around digital sovereignty have moved from the margins of policy debates to the center of the EU's technology agenda. A series of geopolitical and economic developments have contributed to this shift, including supply chain disruptions, growing tensions between the US and China, the extraterritorial reach of legislation such as the U.S. CLOUD Act, and broader concerns about Europe's dependence on foreign cloud providers, artificial intelligence (AI) infrastructure, semiconductors, and critical digital services.
Together, these developments have prompted policymakers to examine whether the EU can maintain sufficient control over the technologies upon which its economy, public services, and critical infrastructure increasingly depend.
As this KuppingerCole Analysts’ Advisory Note argues, the real question is not whether digital sovereignty supports the EU's technological and economic interests, but rather how digital sovereignty can be structured to support these interests without undermining security or economic competitiveness.
Against this backdrop, the European Commission introduced the European Technological Sovereignty Package on June 3rd, 2026. The initiative aims to strengthen the EU's capabilities in semiconductors, AI, cloud infrastructure, and open-source technologies.
As Commission President Ursula von der Leyen noted, the objective is to ensure that Europe can "make its own choices" when it comes to the technologies on which its economy increasingly depends.
The package includes two legislative proposals. The first, the proposed Chips Act 2.0, seeks to expand semiconductor capacity, support strategic investments, and strengthen links between chipmakers and growing sectors, such as cloud, data centers, and AI. The Cloud and AI Development Act complements this by aiming to significantly increase European data center capacity while supporting sustainable AI innovation and establishing a common framework for assessing cloud and AI sovereignty.
Additionally, the package includes an Open Source Strategy that will support a stronger open-source ecosystem by investing in skills, open-source start-ups, and the long-term maintenance and security of Europe’s open-source digital infrastructure. These efforts may not generate the same attention as billion-dollar funding rounds, but they create the foundations that allow digital businesses to emerge and scale.
Beyond the immediate implications for software development and innovation, these investments also matter for cybersecurity and identity and access management (IAM) professionals. Strong digital ecosystems create demand for secure authentication, digital trust services, identity verification, and privacy-preserving technologies.
They also increase the need for interoperable identity frameworks capable of supporting cross-border digital services, digital wallets, and emerging AI-driven applications. As organizations adopt more cloud-based and distributed architectures, identity increasingly becomes the control plane through which access, trust, and governance are enforced.
From Growth to Strategy
For decades, the US acted as the primary destination for technology professionals from around the world. As noted earlier, however, migration patterns have begun to shift. According to recent analysis, the flow of technology talent toward Europe has increased, supported by growing innovation hubs in cities such as London, Berlin, Paris, Dublin, and Stockholm.
Political developments, immigration policies, and changing perceptions of opportunity have all contributed to this trend. Whether this trend proves temporary or permanent remains uncertain. Nevertheless, access to skilled engineers, researchers, and entrepreneurs remains one of the most important ingredients in building successful technology ecosystems.
Europe’s technology growth is often framed as an economic issue. It is increasingly a strategic and geopolitical one. The debate around digital sovereignty is not simply about reducing dependence on foreign technology providers. It is also about ensuring that the EU can develop, retain, and scale its own capabilities in critical digital sectors.
However, the EU continues to face substantial gaps in scale, investment, and market fragmentation when compared to the US and China. Yet the direction of travel is becoming clearer. Policymakers increasingly view technological capability as a strategic asset, one that affects economic competitiveness, security, resilience, and long-term prosperity.
As outlined in the Draghi report, for tech companies to scale and grow, the EU must expand venture capital and continue to promote an independent digital ecosystem that empowers European startups to grow at home, whether that’s in Dublin or Paris, and not flee to Silicon Valley or Shenzhen.
Europe still faces significant challenges. Yet the recent growth in investment, digitization, talent attraction, and strategic initiatives suggests that the conversation can no longer begin and end with comparisons to the US. Increasingly, the story is about what Europe is building.
