Digital sovereignty and the limits of regulation

The article argues that Europe’s push for “digital sovereignty” — through measures like the AI Act, GDPR, NIS2, DORA and national cloud certification — risks slowing tech competitiveness by raising compliance costs, disproportionately burdening startups while benefiting large incumbents. Structural constraints (permitting delays, grid limits, high energy costs) have left the EU with only ~5% of global AI compute versus ~75% in the U.S., and hubs such as Dublin and Amsterdam have paused data‑centre approvals. Venture funding dynamics widen the gap: European VC grew 9% in 2025 versus 46% in North America, making scale harder for EU AI founders. The piece recommends policy focused on faster permitting, cleaner cheaper energy, deeper capital markets and regulation calibrated to spur growth rather than protect incumbents — i.e., open markets, investment and competition to make sovereignty meaningful.