What is hindering the growth of European technology companies?

According to the Financial Times, some argue that the weak and fragmented European capital markets are hindering the development of technology companies in the region.

For complicated reasons, the EU is increasing its control over the US Internet giants. In it, partly because of anger at the abuse of the dominant market position of these technology giants. But more importantly, Europe has lagged significantly behind in the competition to build its digital economy in the 21st century, and it needs the right policies to catch up.

Europeans are not lagging behind in technology use, but it is the United States, not Europe, that lead innovation in this area. For now, it must be said that EU technology scrutiny is on the right track, as it focuses precisely on the open technology market, mobility, data sharing and restrictions on large companies considered. “guard”. It would be difficult if Europe is satisfied with large-scale tax collection and manipulation in terms of high technology.

The digital industry’s ability to succeed requires the support of regulatory agencies. But for now, European tech companies have a harder time scaling up than US companies, and the main reason is whether or not regulators support them. Europe needs to set a goal, not only to allow technology innovators to easily expand their businesses to the whole of Europe, but also to not hinder the growth of technology enthusiasts.

In addition, there is another reason is lack of capital. In Europe, the main method of financing is a bank loan, but it is not suitable for risky technology startups. Compared with the US or the UK, the stock market is exposed to market risk, still very weak and superficial and more fragmented.

Another main reason is that the commodity market, especially the service market, has not yet been fully integrated. In the US, once a technology startup is successful in the local market, it can almost easily expand its business to the entire US market. This creates a good foundation for the company’s business expansion to other parts of the world.

But in the so-called single market of the European Union is completely different. Not due to a lack of digital technology rules, on the contrary, it is the fragmented “old” market in Europe that makes it difficult for tech innovators to create new and cheaper ways to reach supply. Large-scale cross-border level. Especially with different products like music, finance, legal services and even physical goods.

Therefore, if Europe wants to build a robust digital technology industry, it is necessary to address two non-digital problems, including establishing EU-wide stock markets for companies of all sizes and establishes an EU-wide digital regulatory system. The respective European regulatory system currently in place is difficult to adapt to the development of the digital industry. This will allow more companies to sell their services across the EU in the first place.

In addition, to establish a deeper capital market and a fully functional single market and then pave the way for the booming European digital economy, two other factors are needed. First, the creation of a digital euro will give fintech innovators the opportunity to develop new services.

The digital euro will change areas of business such as insurance, stock exchange, clearing and a range of services aimed at consumers. Companies that can do this in their home market will first be at the forefront of global competition. This is a huge first advantage.

Second, the comprehensive use of incentives, standards-setting, subsidies and public procurement to drive demand for European technology products. For example, the EU’s privacy policy is largely seen as a burden, but it could have been an opportunity for European technology companies to develop user-friendly privacy management practices.

In addition to public procurement and other financial incentives, Europe also needs to adapt a set of policies to conform to specifications with product standards and specifications.

Another possible way is to provide a competitive “public choice” for digital applications that can effectively create a marketplace. Applications (such as Uber) must be tailored to the European tax, employment, and licensing systems. In terms of fee collection, as long as it is recoverable public funds used to develop the application can be recovered.

Another example of this is Tim Berners-Lee, the “father” of the World Wide Web, working with MIT on an ambitious project – the development of a social network under a rights-friendly agreement. private. The EU should also finance similar ambitious projects in Europe.

In short, Europe’s old economy needed a lot of change to take full advantage of the benefits of new technology.