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American technology firms are increasingly dominating the world's digital economy.
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00:00Europe is dependent on American tech that much it's clear whether it's the
00:05cloud the apps on your phone or increasingly artificial intelligence and
00:10just as companies and governments here we're starting to realize okay this is
00:13a problem and steering the ship slowly turning it in comes China which is
00:19increasingly innovating artificial intelligence in new and exciting ways so
00:25is Europe already a colony of American companies can European alternatives
00:30seriously challenge these US tech titans and can businesses and governments
00:35here get their act together before China comes in for its share of the pie
00:40welcome to the dip the podcast looking at money power and consequences I'm Cassandra
00:48to dive in and figure out how we got into this dependency and whether there is a
00:53realistic path towards digital sovereignty for Europe I'm joined by Christina
00:58Kaffara she's the co-founder and chair of the Eurostack initiative and long-time
01:02critic of digital market concentration thanks for joining us again from
01:06Amsterdam and I'm also joined by Raphael Offan he's joining us from Geneva today
01:11because he's the chief operating officer at Proton a Swiss technology company that
01:16offers privacy focused online services and software Raphael you're currently with
01:21Proton like I said but you were previously with Quant which is a European
01:25search engine out of France with a privacy focus as well why do you keep going to
01:29these smaller tech companies instead of jumping ship to say Google or Meta
01:34well I think as a European I think it's important to be able to to fight for the
01:39for the values that we have in Europe and and to be able to be part of the of the
01:44growth story that these European companies are able to to drive so here
01:49at Proton it started 12 years ago before I joined Proton and I joined two years ago
01:54and in 12 years it went from a from a project that was started in CERN in
01:59Geneva to a company of more than 650 people and 100 million users around the
02:04world so here being part of this story of of of seeing your value-based
02:10companies able to to to to grow worldwide that that's a that's a fantastic
02:16adventure Christina you're a big critic of digital monopolies but I'm going to
02:21need you to come clean how many American or Chinese apps do you have on your
02:24phone I have multiple but this isn't the point the issue of a dependency is not
02:32about apps and services the issue is about the stack the infrastructure on which
02:36these services run focusing on the apps and services has been the mistake that
02:42Europe has made for the last generation where the European Commission has tried to
02:46regulate these companies for bad behavior as if what the nature of the power that
02:52was rolled over us was really bad manners and we have to teach them to behave the
02:59nature of the power that was being rolled over us was infrastructure and that is
03:03hardware software connectivity operations controls all of these dimension in a
03:10layer of of of infrastructure that ultimately we do not own and do not
03:17control and on which our entire life depends so yes I'm a big critic but the
03:22reality is that we have been certainly making our own life problematic by
03:29focusing on the wrong thing we've regulated this with two failing egregiously to
03:36regulate these companies for the best part of 20 years and we didn't look at the
03:40right place which is where the actual power was actually being ruled out now that
03:46zoom out that you you speak about Christina I think is really fair I want to give
03:49one statistic to our users the European Commission says that the EU relies on
03:53non-EU countries for 80 percent of its key digital projects so Christina has the
03:58horse already left the barn here the European Commission is the last we should
04:03be listening to over here as Europeans we have a tendency to be totally infantilized
04:09into this position in which we look up to mummy the European Commission and say
04:15someone needs to do something well newsflash the European Commission is not going to
04:21do anything of any use to anyone because they have regulated for the best part of 20 years
04:27we fail the results and when it comes to building they have not built anything
04:32the ones who are going to be building are the companies it's not the European
04:39Commission it's an institution of bureaucrats and lawyers they've never run a
04:43lemonade stand what exactly do you think they're gonna build so I think that of
04:49course we are already a digital colony to go back to your initial statement we
04:53already are the Chinese are gonna run in and take a very very significant piece
04:59because a combination of incredible capability authoritarianism and sheer will
05:06they have actually leapt into the position of being the true wonder at this point
05:14but it isn't to say that all is lost Europe has tremendous capabilities I don't mean the European Commission forget
05:21it don't go to Brussels waste of time
05:23but at the level of actual tech companies individuals Europe is amazing I get incredibly frustrated when I hear people
05:34saying oh we are just a middle
05:35power no forget it we're not a middle power we are an economic superpower we have
05:40incredible talent we have incredible companies we have incredible capabilities we
05:45are rich as God and we are still allowing us to talk down others to talk down on us we
05:51can and we will speaking of one of these companies that's trying to build something
05:56of course we have Raphael here from proton Raphael I want to ask you about this
06:00term digital sovereignty it's so easy especially you know if you're like me and
06:04you've read too many European Union or European Commission white papers to like fall into these
06:09buzzwords but when we talk about digital sovereignty what does that mean to you
06:14yeah well what's important for us is to really look at individuals across Europe and
06:18companies across Europe and what do they use I mean we did a survey last year and
06:22going into the technical mail systems across Europe and we found out that
06:2774% of the public listed companies in Europe like from large to small public listed companies
06:33relying on the US email services so when you have this level of dependency it goes into the
06:40term of digital colonies you don't have you have you have full full dependency on these
06:45large US tech players and maybe tomorrow US plus China Chinese tech players now to the term
06:52digital sovereignty is basically about having the the choice of alternatives and being able to
06:58invest in those alternatives as a private player as an individual and to be able
07:03to say okay I have an equivalent email player here in Europe that is able to provide me an
07:09alternative to Microsoft or Google okay I'm going to make this investment and by this
07:15investment I'll have a like a short-term and long-term return short-term by reducing the risk
07:20of the kill switch which is a real risk that is a over like many companies in Europe but also
07:26making a long-term investment in the in the European ecosystem here I'm talking about
07:31Proton but it's about the entire digital European ecosystem so again digital sovereignty is about
07:36having the choice of alternatives here in Europe for alternative players to the US tech players you
07:42mentioned this term kill switch Raphael give us an example of what that might mean I know some
07:48critics of that term say it's it's a bit alarmist but what's the risk here in your mind
07:54well we have real case examples of companies which in the last and it's been woken up by
08:00by the recent US administration it was there it was latent but it's been increased in terms of awareness
08:08in the last in the last one year but the kill switch is about a company being told whether through
08:16a major
08:16price increase or through another notification that they will not be able to to use their digital
08:23email services and we have multiple companies which came to us saying okay we we are exposed to this risk
08:29uh we we we could come in the crosshair of the US administration uh we want to have a digital
08:38infrastructure that's resilient to that to that and recently we have an international organization
08:43uh with 5000 users worldwide and they have operations everywhere in the world including in Europe
08:50and the headquarters in Europe but they are everywhere in the world and they came to us really without they
08:55they they have a Google workspace infrastructure and they said okay we cannot be sure that Google will run
09:02for us with the current administration so we are more comfortable of having a service that is like
09:10totally independent from this uh government power in the US Christina what industries are we talking about
09:16that might be hurting because of a dependence on American or increasingly Chinese technology
09:22can I can I reframe it slightly because I think we can um we need to be clear when
09:30with the listeners about what we are talking about as I say when you think about the digital industry
09:36there is a vertical supply chain and so what Rafael is talking about is of course proton which is a
09:42service
09:43it is an email alternative to gmail and all the others below that to enable all of that there is
09:52of course a huge stack
09:55of levels that include as I say hardware cloud data center software and then the connectivity the orchestration the systems
10:07the permissions the permissions the all of that is also this before you even get to the bottom where you
10:14have the chips
10:15the chips are provided essentially by a world monopoly which is Nvidia
10:19we're all dependent on Nvidia generating this chips flow that everybody uses more or less
10:28and the bit that's on top before you get to Rafael service is also a super important set which is
10:37where the absolute
10:40dependency lies in which we have no alternative as you said 90 percent or 85 of the cloud sector in
10:49Europe is owned by others
10:51so who is exposed to this everyone is because industries are to the extent they have a digital life
11:00universally operating on this infrastructure the debate on AI now when you hear companies
11:07saying Europe can be a champion of industrial AI because we have really interesting domain capabilities
11:15in industrial sectors and we have the data we can build our AI on top and then you might ask
11:22the question
11:23but sorry but but for these AI models and and applications that you're going to build which infrastructure
11:31are they going to run on and it's the same infrastructure owned by the hyperscalers in other words
11:37Google Amazon and Microsoft so we cannot be sovereign in anything unless we tackle the issue of our dependencies
11:47in the big big in the middle below where Rafael sits and so one other way I would like and
11:57I conclude to put it
11:59is it's not just in inverted commas about resilience and security I don't like that framing
12:05because it is defensive it makes us look like oh my god we are kind of absorbing the punches and
12:13we need to somehow learn to somehow defend ourselves the issue is proactive the reason we need sovereignty and for
12:23me
12:23the meaning of sovereignty and many others is really creating assets that we control and on which we can invest
12:33and
12:33which value we can capture because unless we have this infrastructure that at least in part
12:39is controlled by us we are like somebody building an extension on somebody else's house and one day
12:46the owner of the house will say nice extension you got there I'm going to chuck up the rent even
12:50further
12:51so we are not in any way capable of determining our own investment agency and capabilities going forward
13:00if we do not build at least some of that infrastructure ourselves this is about economic growth this is not
13:08just
13:09about not being scared of Donald Trump right it's about growing this continent Rafael respond to what
13:15Christina is saying is this kind of supply chain this broader image that that she's painted so vividly there
13:21is that how you're experiencing it at proton the proton we decided to invest very early on and from the
13:29start actually in our own infrastructure so we don't have our own chips but we are we have our own
13:34infrastructure
13:35our own data centers that we we own and operate we have a like 10 percent of our staff who
13:40are running our
13:41internal cloud just for ourselves and so we are not dependent on any us cloud provider and and initially it
13:48was
13:48for privacy and security objective and it turned into a privacy security and european sovereignty advantage but now
13:57going back to the to the continent table i fully agree with christina that um we need to be able
14:04to to to to have
14:05strong players in each part of the stack so that's uh it's not only at the application layer for us
14:11it's
14:11application and and data center layer but it's true we we still rely on the nvidia chipset or amd chipsets
14:16that
14:16buy or intel chipsets so we need looking forward for the next 10 years we need to be able to
14:21invest
14:22in uh in all the key part of the value chain so that we are we have full autonomy and
14:27full uh digital
14:28sovereignty rafael on our last episode when we were talking about digital sovereignty and european
14:34alternatives there was this idea that came forward what that was essentially well if european alternatives
14:39were good enough people and businesses in europe would use them how would you respond to that
14:45what what we see is that at proton we have a hundred and more than a hundred thousand i have
14:50the exact number
14:51but it's not yet public but more than a hundred thousand uh organizations and businesses of different
14:56sizes that are relying on our product so those more than hundred thousand organizations already see our
15:02product as being a company team with uh with microsoft and google where um where it's sometimes
15:08difficult it's uh in in large organizations um where uh it's very it's been like it's been a cost
15:18for it it's been an it cost for last 10 10 years it's not seen been seen as by companies
15:23as an
15:24investment and as such they started with a microsoft component i did another microsoft component and then
15:3010 years later now they have like 20 components so it's very difficult to entangle and that's
15:36technical that's a technical view the other aspect is uh when when uh when this large us tech players
15:42come in they usually uh make it very easy for it to say okay nobody gets fired for for choosing
15:50a
15:50hyperscaler today uh 20 30 years ago it was nobody gets fired for choosing ibm today's nobody gets fired
15:57for choosing a hyperscaler because you have everything in there you have all the components components that
16:03you need so here in europe you you have all the components that are competitive but it's a more
16:09fragmented world that means you need to to for email you can buy this very good email service from
16:15proton for this service you can buy this very good service from another company so you have multiple
16:21components that you need to assemble together now what's interesting here is when as a company uh you
16:27you you you you adopt these different components you end up having more independence it's a bit more work
16:34to to assemble together but you have more independence you have more autonomy because if you have
16:39one player that is um trying to to play uh play against you you can quickly change this component
16:45but if you have the full stack that is a full microsoft stack or for google stack
16:50well as as it you are completely uh in jail for for the coming years so it is very long
16:57time for um
16:58for for you to entangle this this dependency and in that same episode when we were talking about
17:04digital sovereignty last time one of our listeners and we do read the comments so if you have a comment
17:08about this episode please leave it wherever you're listening or watching right now but one of our
17:12listeners did have pushback on this idea that i just gave to rafael kristin ho wrote that it is a
17:18matter of how much you spend in marketing open source projects can be 10 times better than commercial ones
17:23but if there's no one to do a conference presenting the so-called pair phone 25 only a few will
17:29use it so
17:30that comment there from one of you um christina i'm wondering you know at its core is europe not
17:36promoting itself enough is there kind of this like showing our belly uh saying oh so sorry to interrupt
17:42or what's happening when i find myself with who says europe finds itself in the position of being
17:50behind it's not finds itself it's not like it snuck up on us in the last five minutes it's because
17:57we did
17:58nothing so where were we were the americans at fault to fill a vacuum of course not i mean what
18:05rafael
18:06rightly says of course everything is path dependent if 10 years ago 15 years ago you started with a
18:12microsoft component then you add it and add and add and they're very good at distribution and selling
18:17and then you have a microsoft ecosystem is it their fault no it's not absolutely not it's because we fell
18:24asleep we were over there regulating google search we were over there regulating the app store and
18:31bestager was doing bicep emojis saying we are taming them newsflash no one has been tamed and we built
18:38nothing so it's not as if we can blame anyone but ourselves and a question that your viewers who never
18:47put
18:48what uh if it were good enough uh if it were good enough why aren't they used again uh already
18:54it's very very dumb sorry the the point is that there is path dependency you have a habit because you've
19:03been used to uh effectively adopting and using microsoft or aws for years you're not going to switch
19:10instantaneously there are complicated dependencies does europe have itself to blame absolutely a hundred percent
19:17so what needs to be done is uh on two fronts well yes companies need to interrogate seriously what
19:26alternatives can there be and the industry itself needs to interrogate itself about how can they be
19:34better not just start marketing it's not a question of marketing as such it's a question of providing an
19:40integrated offer that customers can actually like and switch to because if you go there and you're
19:47you have bits and pieces bits here bits there no one's gonna switch to you and and and that's
19:53completely legitimate there needs to be a process in which alternatives are made clear and they are
19:59a palatable not just you know oh i've got my logo on a map and somebody will find me that's
20:05dumb
20:07christina uh you pointed out last time uh you were on the pod that uh eu startups are second to
20:12none but i
20:13can't help but wonder can europe hold on to these companies as they scale up and launch more products
20:20look as as as you say european innovation is second to none we have a fetishistic obsession with we need
20:31more innovation no we don't we have tons of innovation in europe our universities are some of the best our
20:38startup creation rate is higher than the us whereas you say we are not good at is to productize to
20:45turn
20:46these ideas these startup into products and that is a question of funding nothing else end of market there
20:53are two factors either you have a market you can sell into and of course the us is at an
20:58advantage
20:59because they have a broad market europe has 27 segmented markets and it's uh difficult to sell across
21:05so the barriers are real but importantly there is a funding thing the funding thing is what i insist on
21:12because there is again a vision in europe we tend to blame everyone else but ourselves we tend to say
21:19oh
21:19but you know with these big bad big tech companies the startups aren't growing forget it it's not because
21:26of amazon or microsoft that our startups aren't growing it's because we are not funding them and where is the
21:32money let's ask ourselves because in europe we are richer than god because in europe we save 1.4
21:39trillion euros a year in the us 0.7 so we save twice as much as the us our pension
21:46funds and insurance
21:46companies sit on 14 trillion euros of assets under management what do they do with it do they fund
21:53european tech no they send it to retirement home and bonds and why aren't they oh because you know we
22:00need the risking we it's all very risky meanwhile they fund they send 300 billion to us tech to fund
22:06them
22:07so it's us it's not the americans doing something to us it's us so this mindset the kill switch all
22:17of
22:17these things that tend to put the blame and the fear on somebody else obfuscate the fact that we need
22:25adulting over here we need agency over here we need the ceos of big companies instead of going to
22:32von der leyen and having a lobby dinner to say i'm gonna put x billion behind european tech because that's
22:40what i need to do that's the reality rafael respond to this what do you see as the needed fertilizer
22:48or
22:49gas on the fire pick your metaphor uh for europe right now how can things be sped along
22:56you know the john tyrol the nobel prize economics economics nobel prize um
23:04recently came out with a book and he he stresses on two things for uh for europe one is uh
23:11to to to
23:12reflect what uh christina was saying we've lost an appetite for risk so if we invest indeed as a
23:19as a continent only in retirement homes and low risk thing we we don't we don't invest in the in
23:26in
23:26the future the other thing more looking at the past the the private r d over the last 10 20
23:32years
23:33uh has been invested in what uh john tyrol calls uh mid tech medium tech not tech medium tech is
23:41basically automotive automotive has been a big investment over the last uh last 15 20 years in
23:47europe but that's what has also made us lose the investment that could have been made in tech that
23:52could give us an edge today so here to answer your your question uh it's really about europe to indeed
23:59wake up um to invest in its future for european entrepreneurs european startups and scale-ups to be
24:06uh to to not expect anything out of of policies policies can can help but it's not they cannot expect
24:15everything from that and it's then to win customer by customer through uh convincing these customers
24:21with an excellent product so to me it's really about that is european companies startup they take
24:27ecosystem developing great products and really uh making sure that european companies want to buy this
24:34product but it's also a mindset shift for european companies to to to see that by investing in the
24:41european ecosystem which have good products they also investing in the future of their own companies
24:48earlier in this conversation christina did a great job of outlining this stack right um all these
24:53different components that feed into one another rafael what sectors do you see as the most fertile ground
24:58for europe to catch up on in here is it going to be chips is it going to be ai
25:03what do you see is as
25:04low-hanging fruit i'm really i'm really belaboring this metaphor but i hope you catch my drift
25:09all right i i which ones win i think on the application layer we already have fertile ground and an
25:17ecosystem that that is that is there um now we definitely need to invest in making sure that uh
25:23the the the european data centers are not all us and and china owned uh and then yes long term
25:32we need
25:32to to really invest also now for the long term for a long-term return on their on ai chipsets
25:38so it's
25:39uh to me we need to invest over the the stack we are already quite strong on the application layer
25:44but as
25:45christina said earlier we need to be able to to go down and and build on the on the on
25:49the below uh
25:50below layers of the the technology stack and christina i can see you're keen to respond as well
25:55i wanted to say one of the problems we have in europe is we pay deference to people we shouldn't
26:01really care for and professor tyrol is a great economist i don't care at all for his opinion on how
26:08the tech industry has gone and it is one serious point we tend to admire the problem and scratch
26:14our beards and say oh what does the nobel prize think of this who cares we need people with guts
26:22indeed like proton like the founder of proton who just don't care for what professor so and so is
26:28telling us but just go out there and create a product so where can we be we can be all
26:36over
26:36because the start really can be invested from software to hardware to data center to cloud to ai
26:42everywhere i'm not saying we're going to take it over it's impossible to those who kind of describe
26:49my position and out of eurostack as exclusive or protectionist move over they will be here forever
26:58we're not going to replace american companies we are just trying to increase
27:03our share of our own market somewhat and you know forget the professors this has been one of the
27:10great big mistakes of europe we pay deference to people we shouldn't care for i only want to hear
27:16from capital allocators and funders and funders that's it thank you chris dina have a have a good rest of
27:23your day thank you rafael ofan joining us today from geneva where he's at proton rafael thank you so much
27:31thank you that's it this week on the dip if you have a comment or question you can of course
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