\nBen Schroeter is Director of Economic Policy at Booking.com.\n<\/p>\n
\nOnce hailed as a beacon of postwar reconstruction, social cohesion, and industrial excellence, Europe now finds itself watching the technological future unfold from the sidelines. <\/strong>\n<\/p>\n \nFrom AI to semiconductors, from cloud computing to social media platforms, Europe \u2013 despite its talent, wealth, and history \u2013 is falling behind. The question is not whether Europe is innovative or capable. It is. The question is: Why can\u2019t Europe compete?\u00a0\n<\/p>\n \nOne could point to obvious culprits: risk-averse investment cultures, fragmented markets, a lack of homegrown tech giants, and slow-moving regulatory bodies. But there is something deeper, a philosophical rigidity which Paul Krugman once described<\/a> as holding back post-reunification Germany. It\u2019s the ghost of Immanuel Kant: his categorical imperative this time not just haunting Berlin, but also Brussels, Paris, and the wider EU.\u00a0\u00a0\n<\/p>\n \nEurope doesn’t lack engineers. It lacks boldness. Not ideas, but permission to will them into existence.\n<\/p>\n \nThis gap between potential and performance isn\u2019t due to indifference or a lack of effort. There are brilliant AI researchers in Zurich and Paris. Stockholm and Amsterdam have vibrant startup scenes. Estonia digitised its government while much of the U.S. still runs COBOL<\/a> on mainframes. And yet when scale-up time comes, European startups often move west to raise capital and grow.\n<\/p>\n \nThere is a moral philosophy underlying Europe\u2019s economic posture, a kind of deontological discipline that puts what should be done over what works. Privacy is sacred, big companies are suspicious, and consumer protection is gospel. These are not bad instincts. Indeed, in an age of data abuse and corporate overreach, they are often admirable. But good instincts aren\u2019t enough \u2013 what matters is how they\u2019re implemented. Principle without pragmatism paralyses. In trying to shield society from harm, Europe too often ends up shielding itself from progress.\n<\/p>\n \nTake the GDPR. It was an earnest and important attempt to protect citizens’ data \u2013 but also a compliance nightmare that ossified digital innovation<\/a>. Or the AI Act \u2013 an ambitious attempt to make AI safe, ethical, and transparent. Laudable in theory, but in practice it risks choking startups with bureaucracy before they ever write a line of code. The EU will soon have 27 AI regulatory authorities but few leading AI companies.\u00a0\u00a0\n<\/p>\n \nIt\u2019s not that Europe regulates. It\u2019s how it regulates. The European model is defined by a dense, layered system \u2013 one that favours exhaustive rulemaking over adaptive principles. It seeks to anticipate every possible scenario, offering detailed guidance that often confuses more than it clarifies.\n<\/p>\n \nThe result? Companies are overwhelmed by precise but paradoxically ambiguous instructions, forced to navigate complexity instead of being empowered to exercise judgment. This approach stifles initiative, burdens innovation, and creates uncertainty not through the absence of rules, but through their overabundance.\n<\/p>\n \nEurope’s devotion to stability, order, and rules-based systems once delivered miracles. But in the 21st-century tech economy, ambiguity is the rule, not the exception. Disruption is chaotic. Innovation breaks things. Unicorns are messy.\u00a0\u00a0\n<\/p>\n \nKant would not approve. But Schumpeter might.\u00a0\u00a0\n<\/p>\n \nTo compete in this era, Europe needs to be more forgiving \u2013 of failure, of success, of inequality. It needs flexibility in regulation, boldness in investment, and perhaps most controversially, a touch of American-style pragmatism. As Paul Krugman wrote in 1999: \u201cAmericans are philosophically and personally sloppy: they go with whatever seems more or less to work.\u201d In a time of rapid technological change, trial and error may be a better guide than the maxim that all your actions should be fit to become universal laws<\/a>.\u00a0\n<\/p>\n \nThis doesn\u2019t mean abandoning Europe\u2019s values. It means reframing them for the digital age. Privacy must be protected \u2013 not by clinging to outdated mechanisms like cookie banners, but by pioneering smarter, embedded forms of consent that empower users without exhausting them.\n<\/p>\n