The “Brussels defect”, is a bug in a world that needs credible strategy instead

Call it the “Brussels defect”: the habit of treating market rules as a substitute for strategy. As Abe Newman recently coined it in the Financial Times, Europe’s regulatory reflex no longer matches a security-first world.

Over the past decade, fines became a cost of doing business, US platforms scaled regardless, and Europe’s technology base fell further behind. Rules without industrial capacity are muscle without sinew. The policy pivot is obvious but hard: shift from rule-setting to capacity-building. Digital sovereignty is, at bottom, industrial policy—fund it, scale it, export it.

EuroStack plans

Newman touts the emerging EuroStack plans. These proposals are a start, but skeletal. They mostly neglect two engines of US digital power: network effects—where scale compounds advantage—and deep capital markets that finance ecosystems, not just firms.

The current EuroStack plans talks about federation and open source a lot. Yes. It can play a role in parts of the stack (particularly the back end), but they are not a growth model on their own. Part of the problem then is a suspicion of large centralised European players - European “Big Tech” if you will.

But Europe will likely need a mix that also includes centralized, proprietary champions in targeted layers, precisely so capital markets can do their work of aggregation, IPOs, and follow-on financing.

Both innovation and capital markets tend to cluster in specific geographies. But European member states jealously guard what they have and fight any such clustering elsewhere.
Fragmentation is the perennial European problem. The most crucial first step is then is political –– choosing to be European first.