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Friends or foes? How the European and American tech industries can work better together

"US businesses believe the European market is theirs to grab," says Scaleway CEO Yann Lechelle. Can they learn how to get along?

By Poppy Koronka

Silicon Valley has long been the ultimate symbol for innovation, disruptive startups and all things Big Tech.

Europe’s tech sector, on the other hand, has been much slower to blossom, partly due to more protective regulation and a historic lack of investment in research and development.

Yann Lechelle, CEO of Scaleway, a cloud service provider that runs a global startup programme, believes change is not only possible, but necessary for the European tech sector to grow — and for startups in both the US and Europe to flourish.

Sifted interviewed Lechelle about how the US and Europe can build better cooperation — or ‘coopetition’, as he puts it for a healthier global industry. 

What’s the issue right now between the US and European tech industries?

The US is way too dominant with monopolistic tendencies on a global scale. It harnesses too much of the market, meaning Europeans do not have a voice in how the future of technology will evolve.

“US businesses believe the European market is theirs to grab. You see this particularly when it comes to data protection issues…”

US businesses believe the European market is theirs to grab. You see this particularly when it comes to data protection issues. The US Chamber of Commerce published an article on how it believes European companies are starting to hinder US businesses with GDPR regulations, because they’re stopping US companies from easily accessing the European market and preventing them from creating jobs in the US. You see the mindset.

Why does this matter for startups, especially those with global ambitions?

Highly interesting and essential political debates are currently taking place in Europe, on issues like promoting digital and technological sovereignty, the EU’s resilience and competitiveness and how to deliver the level-playing field between the EU and US. All these debates address higher-level industrial and geopolitical concerns, but they have direct implications on startups too.

The very essence of Silicon Valley and its supremacy is built on decades of successful startups and entrepreneurs who keep on fuelling this self-fulfilling prophecy: bright ideas with potential are put through a cut-throat filtering process and propelled forward by smart venture capital.

This has led to the emergence of a handful of trillion-dollar companies now the most powerful companies in the world, most of which are in California. The difference today is that these companies are trusted with pretty much every single aspect of our activity online, globally.

But what does that really mean for European startups? Isn’t there room for them to get a piece of the pie?

Startups across the world used to hope for an exit or acquisition by one of those mega companies. But it’s no longer possible to build an exit strategy by relying on Big Tech to write the big cheques, given the sheer number of startups worldwide.

There’s more VC money globally, more startups, more bankruptcies… and yet, these large players have found another way to dominate — via free cloud credits. These [credits] ‘help’ emerging startups scale on their platforms but also create financially binding dependencies in relation to future growth…

Startups across the world used to hope for an exit or acquisition by one of those mega companies. But it’s no longer possible to build an exit strategy by relying on Big Tech to write the big cheques.”

Free credits are akin to investing in a startup… but instead of expecting a single large payback, it guarantees ‘dividends’ from each and every startup that survives past its first year, and the dividend grows every year in line with that startup’s increased cloud consumption.

And it’s appealing for single startups — who doesn’t like free credits? But at the macro level it’s a recipe for an ecosystem disaster, as it’s reinforcing the dominant position of Big Tech players and weakening competition. For startups, it isn’t a problem until they’re large enough to become a nuisance for massive established players.

In other words, the current situation favours the status quo: giant US players reaping most benefits at the top, and innovative challengers muffled at the bottom. And EU regulations are indirectly helping the situation.

How so?

By voting for GDPR, the Digital Markets Act and the Digital Services Act, Europe sought to point out it was time to renew privacy standards, readjust the rules of competition and give power back to its citizens. 

The intention was never to descend into competitive hostilities between the EU and the USA. But it’s inevitably strained the relationship because, ultimately, regulation is all about saying: ’You’ve gone too far, so we’re going to impose barriers to entry.’

That’s bad for the US, and bad for us as well, because barriers to entry can create markets that are a little stale or difficult to access — even for internal players.

The US really needs to look at Europeans as partners, and then they’d stand to win in the long term. If Europe is stronger, with the right regulatory frameworks, then competition will be stronger and the US will also improve.

So the US wants access to EU data, and the EU doesn’t want to give it. How do we move forward, then?

We need to foster a more collaborative approach to data sharing, built on mutual respect.

And antitrust regulation needs to create an environment where competition is synonymous with fair play, innovation and wealth creation. It’s not about owning the game — it’s about making sure a range of players, whether they’re major corporations or startups, can shape our planet’s digital future.

“We need to foster a more collaborative approach to data sharing, built on mutual respect.”

If politicians and policymakers have this notion of balance and true partnership in trade in mind, we can make progress. 

And there’s some hope; the recently announced EU-US Trade and Technology Council may be our last chance to build a balanced and fair digital society and market. In this globalised world, the next technological breakthroughs may give definitive competitive advantage and ideological supremacy, so there’s no time for Americans and Europeans to quarrel, especially with China abiding only by its own rules.

We need to remember that we’re historic partners, united by a common past and shared humanist values.

Apply now for the Scaleway Startup Programs

Understanding how to navigate the tricky Atlantic waters between the US and EU can be vital for startups looking to scale globally.

Scaleway’s Startup Programs are cloud-computing partnerships designed for early stage startups looking to grow and scale and run for a period of six months to a year. Successful applicants to the programmes receive  technical assistance, resources, advertising and (of course) £30k worth of cloud services and tools. 

Read more about the programme and apply here.

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