Digital Freedom: Europe Seeks an Exit from the Trap of Tech Giants

Until recently, the term sovereignty, which was exclusively political, has taken on a digital form, but this does not mean it has lost its political characteristics; quite the opposite. The seriousness of the game is highlighted by a recent example involving the increasingly popular Chinese artificial intelligence assistant DeepSeek. A few days ago, the South Korean personal data regulator issued a statement following an investigation in which it accused the Chinese company of collecting personal data from DeepSeek users and transferring it to China and the USA without their consent. More specifically, the data was transferred to the cloud-platform Beijing Volcano Engine Technology, which is reportedly one of the subsidiaries of ByteDance, the company behind the mega-popular social network TikTok. According to reports from CNBC, neither DeepSeek nor ByteDance have commented on these allegations.

This example once again underscores the growing need for digital sovereignty in countries that do not wish to be mere second-class observers in today’s digital world. The concept itself is quite broad and can be briefly described as possessing a national industrial base in the ICT sector that is protected by a high level of cybersecurity. In other words, it involves having proprietary hardware and software products, manufacturing facilities, and data infrastructure. The urgency of this issue is evidenced by the recent news that over a hundred leaders of European companies and lobbyists have officially called on the European Union to prioritize indigenous technology. Furthermore, digital sovereignty, like political sovereignty, also means that a state independently makes and defines rules applicable to the digital world. In a technological landscape dominated by American tech giants, increasingly challenged by their Chinese counterparts, does Europe have the space and strength for its digital sovereignty?

Technology for the Next Decades

Questions regarding European technological self-sufficiency have long occupied a place in public and professional discussions, particularly becoming relevant due to recent geopolitical shocks, emphasizes Zlatan Letica, a senior manager in the Business Consulting Department of EY Croatia.

– There is no doubt that individuals and legal entities within the European Union are inextricably linked to technology companies located outside its borders. In the event of a sudden cessation of cooperation, a large percentage of key systems and services could become unavailable, which would have serious consequences for the economy and society as a whole. Given that we are changing the way we access solutions and services daily (shifting from on-prem to service-based), the negative impact of such a scenario is becoming increasingly pronounced, Letica asserts.

In this context, ensuring an advantage for indigenous technology would not necessarily result in complete self-sufficiency, but if the European Union decides to move in that direction, it could significantly reduce the negative consequences in the event of unavailability of services coming from outside its borders, adds the EY expert.

– In the long term, to achieve self-sufficiency, the European Union must not limit its efforts solely to reducing current dependence on technology companies outside its borders, but should think about the future and the technologies that will shape the next decades, Letica believes, including quantum computers and general artificial intelligence among those technologies.

Control Over Infrastructure

Complete self-sufficiency may not be realistic in all segments, but digital sovereignty – in terms of control over data and critical infrastructure – certainly is, assesses Filip Olujić, CEO of Databox.

– Europe has strong regulations, high security standards, and is increasingly investing in its own technologies, such as the GAIA-X initiative and the European Chips Act. The goal is not isolation, but independence in decision-making, so that the data of European citizens and companies can remain within the EU and be governed by European law. In this process, Croatia can also play a role by developing local infrastructure and secure interoperable solutions, Olujić believes.

The importance of technological sovereignty has been discussed in Brussels for several years, and the result of these discussions is the Digital Compass. This document contains a vision and ways to significantly raise the level of digitalization in the EU in four main points by 2030. In this vein, Croatia adopted the Digital Croatia Strategy 2032 three years ago. This strategy set four goals: a developed and innovative digital economy; a digitized public administration; developed, accessible, and utilized very high-capacity networks; and developed digital competencies for living and working in the digital age. Experts quickly recognized that the key to achieving European digital sovereignty lies in the digitalization of the public and private sectors with the help of professional ICT service providers that have data centers in Europe. Olujić fully agrees with this assertion.

– Digital sovereignty cannot exist without local control over infrastructure, which includes the fact that key data and systems are located in European data centers and managed by service providers operating within the European legal framework. Investments are significant but necessary, including investments in infrastructure, energy efficiency, cybersecurity, connectivity, as well as in education and the development of professionals. We are talking about hundreds of millions of euros at the level of a single country over the next five to seven years. In the context of Croatia, it is realistic that with strategic support from the state, EU funds, and partnerships with the private sector, we can build a resilient system that supports digital sovereignty by 2030. The private sector is a key driver of digital transformation and can respond most quickly to market needs. It is important to emphasize that this is not just about building hardware, but also about developing trust. Digital infrastructure is becoming the foundation for everything from e-health and justice to industry and the financial system, Olujić asserts.

Own Clouds

In Croatia, the capacities for public administration needs are provided by two data centers managed by APIS IT, while, for example, in Germany, such capacities for all levels of state administration and local self-government are provided by several regional and federal agencies, notes Saša Bilić, CEO of APIS IT.

– In this sense, additional investments in data centers will certainly continue to grow as the broader application of cloud technologies increases the needs of the public sector, but the central challenge in the upcoming period remains the establishment of its own cloud infrastructure, Bilić emphasizes.

Since 2023, he has also been the president of EURITAS, a European organization of public ICT service providers for the public sector based in Vienna, which brings together 13 companies and institutions from ten European countries. EURITAS members provide digital public services for 124 million European citizens. As Bilić adds, cloud computing infrastructure is still largely under the control of companies based outside Europe (hyperscalers), and even open-source solutions, which are often considered neutral, heavily rely on American contributions or funding systems.

– Dependence on them is particularly alarming at this moment when trade relations continue to tighten. Therefore, as EURITAS, we call for the definition of common standards regarding hyperscalers to gain the necessary negotiating power to ensure compliance with EU regulations. Here, I primarily mean mechanisms for the protection of personal data and public administration data that ensure their lawful processing, protection against any abuses or transfers to third countries. As an alternative model, we advocate for a network of cloud infrastructure solutions to be formed and shared by public administrations in the EU/EFTA area, which would meet high security, trust, and preservation of digital independence requirements for public administration. We do not anticipate significant expenses here as the infrastructure is already established, but we are facing some regulatory obstacles that need to be removed, Bilić explains.

Selection Criteria

APIS IT primarily provides its services to the public sector, and it is only in one part of its services that it is oriented towards the market, where it offers IT infrastructure and data hosting in its data centers in Zagreb and Jastrebarsko. Saša Bilić notes that he currently observes greater interest, primarily from financial institutions due to compliance with the Digital Operational Resilience Act for the financial sector (DORA), which has been in effect since January of this year.

– Therefore, we have also invested in expanding capacities, so today we can meet the demands of all users, including those who, like financial institutions, operate under the strictest regulatory conditions, Bilić adds.

However, when it comes to investing in hardware, software, or IT services, whether produced in the EU or Croatia (yet) does not play a decisive role in the selection process. Zlatan Letica notes that the criteria of business users in Croatia when selecting IT products encompass several key aspects, among which price, quality, and the ability of the product to meet specific business needs stand out.

– These factors play a crucial role in the decision-making process, as business users strive to ensure maximum value for their money while maintaining high standards of quality and functionality. The manufacturer and owner of the IT product, although relevant in certain contexts, do not play an important role in the final selection of the IT product itself. Business users prioritize the functional characteristics and performance of the product over its origin, focusing on how a particular product can meet their specific requirements and challenges, Letica explains.

However, it may soon become apparent that something that seems cheaper and better may ultimately become very expensive.