Group update

Over centuries, European ingenuity has transformed the world. From the navigation tools that launched the Age of Exploration to the steam engines and railways of the Industrial Revolution, Europe has a strong track record in innovation. Prosus’s home in the Netherlands has been a beacon of creativity, pioneering the world’s first stock market, inventing the microscope and telescope, and powering modern tech with breakthroughs like Bluetooth, WiFi, and ASML’s cutting-edge microchip technology.

But today, Europe is losing ground. The world’s top tech giants—Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia, and Tesla—are worth over $12 trillion, accounting for a third of the total S&P 500 valuation. Meanwhile, Europe has just four tech companies valued over $100bn, compared to 33 in the US.

As the CEO of Prosus, which is not only the largest tech investor in Europe but has invested over $30bn globally since 2008, with 2 billion customers in more than 100 countries, I regularly meet with a range of incredible business leaders. Over the past six months especially, I’ve had the privilege of engaging with several leaders who are shaping the European tech industry.

It’s been hard to ignore the growing concerns they raise about how excessive regulation continues to stifle innovation, scalability, competitiveness and success. Europe has world-class talent but we lack the same outcomes: fewer breakthroughs, fewer global-scale companies.

Put simply, European entrepreneurs are running through water while their global competitors sprint ahead. Tech founders see this imbalance, and so do policymakers. As the Draghi report commissioned by the EU states: “The problem is not that that Europe lacks ideas or ambition. But innovation is blocked at the next stage: we are failing to translate innovation into commercialisation, and innovative companies that want to scale up in Europe are hindered at every stage by inconsistent and restrictive regulations.”

Over the last 20 years, the U.S. and China surged ahead by leading in tech. Europe, however, chose regulation. The result? A maze of rules—AI Act, NIS2, Digital Services Act, GDPR, and more—that choke innovation. Add to that the burden of heavy reporting requirements like the CSRD, and it is clear why European tech is struggling to compete. Beyond regulation, new findings from McKinsey reveal a massive gap in R&D expenditure in Europe too. Corporate investment in R&D and capital formation by large European firms used to be broadly on par with the US, but in 2022 trailed by €700 billion, with the gap continuing to widen.

The difference is starkest in technology, accounting for €450 billion of the disparity. Combined with today’s complex geopolitical environment, Europe’s reliance on global partners is no longer sustainable. For Europe to compete in the future, we need a bold new mindset—one that champions innovation, accelerates progress, and takes calculated risks. Here’s where we start:

1. Dream Big

Europe has led global innovation for centuries. The next 30 years will bring even more transformative opportunities in AI, robotics, space exploration, and synthetic biology. If Europe is to lead in these fields, which can ultimately transform its economy, public services and society, it must invest in R&D, nurture top talent, foster a culture that values entrepreneurship, and commit to decisive and pragmatic political action.

2. Accelerate and Simplify

European businesses are trapped by compliance costs and a risk-averse mindset. This “fear of innovation” is unsustainable. To succeed, Europe must remove the barriers holding back entrepreneurs and streamline regulations to enable start-ups to scale across the single market. The Letta Report’s advocacy for a progressive approach to dismantling administrative and regulatory obstacles, providing more room for experimentation and fostering a culture that values risk-taking.

3. Lead with Impact, Not Regulation

Europe sees itself as a regulatory powerhouse, but regulation should enable progress, not block it. We don’t need to be the Silicon Valley of rules—we need to be the Silicon Valley of impact. This is especially true when it comes to AI innovation, which requires experimentation and freedom, not restrictions. Currently, Europe attracts just 4% of global AI funding compared to over 80% captured by the U.S. and China. To become a global leader in digital innovation, Europe must empower creators to shape the future without unnecessary constraints.

Europe stands at a crossroads. We can either let innovation wither under the weight of excessive regulation or reignite our entrepreneurial spirit and close the global innovation gap.

At Prosus, we believe there’s only one viable path forward: a renewed focus on innovation. Together, we can fuel a new European renaissance and lead the world in progress once again.

Fabricio Bloisi, Group CEO, Prosus