{"id":468469,"date":"2025-10-02T12:59:29","date_gmt":"2025-10-02T12:59:29","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/468469\/"},"modified":"2025-10-02T12:59:29","modified_gmt":"2025-10-02T12:59:29","slug":"eu-tech-regulation-and-single-market-barriers-are-driving-startups-and-talent-abroad","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/468469\/","title":{"rendered":"EU tech regulation and single market barriers are driving startups and talent abroad"},"content":{"rendered":"

When the European Commission spent \u20ac387,000 on a party in the metaverse<\/a> to promote its \u20ac300-billion Global Gateway investment plan<\/a>, the aim was to showcase Brussels as forward-looking and tech-savvy. Instead, the event became infamous for other reasons: reports suggest that at one point, only a handful of avatars were swaying on the virtual dancefloor.

\n\u00a0

\nWhat was meant as a celebration of Europe\u2019s global ambitions turned into a symbol of its uneasy relationship to emerging technology. But while the metaverse flop grabbed headlines, another challenge is equally consequential \u2014\u00a0and often overlooked: the EU\u2019s own single market.<\/p>\n

The barriers within the \u201csingle\u201d market<\/p>\n

The single market, lauded as the crown jewel of integration, is riddled with barriers that make it costly and hard for companies to grow. The International Monetary Fund (IMF)\u202festimates<\/a>\u202fthese structural obstacles equate to tariffs of around 44% for goods \u2014\u202fthree times higher than between states in the US. For services, the figure rises to 110%.<\/p>\n

\u201cWe’re a unified market, but not really, because if you have a barrier from raising capital within Europe, then how are you going to scale it?\u201d Riccardo Fredro, the co-founder of AI-powered creative agency Anima Studios<\/a>, told The Parliament. \u201cThere is a huge difficulty in having 27 different regulations on how a company should work.\u201d<\/p>\n

To Fredro, the problem is tangible. Because Anima is registered in Italy, he loses significant time researching tax systems in other countries where he does business, sometimes losing customers in the process.\u00a0At pitching events in Belgium, investors told him they could not feasibly back an Italian-registered firm due to regulatory and taxation hurdles.\u00a0<\/p>\n

Such barriers limit the success of European startups, and help explain why\u00a0the US and China remain more fertile ground for tech. In 2024<\/a>, American tech startups received $190 billion in venture capital, while Chinese counterparts raised $38.5 billion. With national legislation designed to enable growth, these ecosystems have produced some of the world\u2019s biggest tech players.\u00a0<\/p>\n

But some see the comparison as unfair. \u201cWhen you talk about the US and China, you’re comparing countries to a regional power where there are different ecosystems in play,\u201d Siddhi Pal, a senior policy researcher in AI at the Berlin-based think tank interface, told The Parliament.\u00a0<\/p>\n

Europe regulates first and innovates second\u00a0<\/p>\n

The challenge is not only market fragmentation. \u201cWe have the US and China really competing and trying to acquire talent and play the game. I feel like we [the EU] are the old geriatric referees of the game,\u201d said Fredro.\u00a0<\/p>\n

Europe has built a reputation as the world\u2019s strictest tech regulator, moving fast to rein in risks before they take hold. That protects citizens and sets global standards, but it also slows innovation, pushes startups abroad and leaves Europe trailing the US and China in shaping the digital future.\u00a0<\/p>\n

The stories are well known: Stripe, now one of the world\u2019s largest privately-owned fintech companies<\/a>, was founded by Irish brothers John and Patrick Collison who had already relocated to Silicon Valley<\/a> when they received a $2 million investment in 2011. Talkdesk, a Portuguese AI customer service platform, launched in Lisbon in 2011, but its CEO Tiago Paiva soon moved to the US<\/a> to access stronger funding programmes.\u00a0<\/p>\n

Manuel Bolognesi, founder of Enrapture<\/a>, an SME selling experiences in the metaverse, believes the EU needs a shift in mindset. \u201cThere needs to be a stronger emphasis on getting things done and started before we debate,\u201d he told The Parliament, \u201cbecause innovation tends to get stopped before it begins because of standards and ethical problems.\u201d<\/p>\n

Europe\u2019s pride in tech regulation\u00a0<\/p>\n

Brussels shows little appetite to pull back. The EU is proud of its role as a global rule maker \u2014\u00a0from the General Data Protection Regulation<\/a> to the Digital Services Act<\/a>, Digital Markets Act<\/a> and the AI Act<\/a> \u2014\u00a0and sees regulation as a way to shape technology worldwide.<\/p>\n

Pal argues this is not a weakness but a strength. \u201cThe EU is building its own definition of success that is more holistic and more sustainable without trying to fit into this race that might lead to running off the cliff,\u201d she told The Parliament.<\/p>\n

The US and China has made trade-offs, from surveillance to weakened press freedom<\/a>, to secure their growth, and the EU is reluctant to follow that path.<\/p>\n

Still, the costs of its model are evident: Google<\/a>\u00a0and Meta<\/a> have openly pushed back against EU rules, even lobbying Donald Trump to retaliate with tariffs, which was most recently suspected to have prompted a delay in a \u20ac2.95-billion fine against Google<\/a> for unfair advertising practises.<\/p>\n

Former competition chief Magrethe Vestager, meanwhile, was nicknamed the bloc\u2019s\u00a0\u2018tech cop\u2019 for daring to act against them<\/a>.\u00a0<\/p>\n

Troubles with talent<\/p>\n

Europe\u2019s strength is talent, but the bloc faces challenges here, too. Namely, struggling to keep it. According\u00a0to interface, the EU hosts a higher proportion<\/a> of AI specialists in its workforce than the US, with foreign nationals making up 37% of that group.<\/a><\/p>\n

Europe\u2019s universities and academic freedoms attract global students, but only 10% of the world\u2019s top AI researchers chose to live in Europe \u2014\u00a0a poignant figure considering 18% of the world\u2019s top AI talent is European.\u00a0<\/p>\n

\u201cPost-graduation, these people either choose to move back to home countries or to the US,\u201d said Pal. Key reasons for this, she added, are visa issues, difficulty moving between member states and limited well-paid opportunities.<\/p>\n

Fredro also noted that regulators themselves often lack technical know-how. \u201cThe people that are regulating don’t understand fully the implications of these technologies and how it works,\u201d he said. Bolognesi urged policymakers to involve industry experts earlier in the regulatory process: \u201cThe difference between getting a million-euro investment and no investment can be one word in a proposal.\u201d\u00a0<\/p>\n

Can Europe catch up?\u00a0<\/p>\n

The Commission is trying. Funding schemes like Horizon<\/a> and Creative Europe<\/a> aim to support innovation, but many startups say the bureaucracy is overwhelming. \u201cThe paperwork is so complicated that most of the times you cannot do it by yourself,\u201d said Fredro, adding that \u201cthe procedures to access and the timelines to access those funds are completely irrelevant to a startup that needs to move fast.\u201d<\/p>\n

Bolognesi noted some improvement. \u201cEuropean funding has become a little bit simpler in the last few years, but we’re still far from what the standards are in other places.\u201d However, he added that Europe has an inadvertent upside: \u201cIn San Francisco, there is millions of companies like mine. In Brussels, there is only me.\u201d\u00a0<\/p>\n

To Bolognesi and Fredro, the Commission\u2019s push to reduce barriers across sectors, including reforms tied to the Draghi report, could help. And Pal sees an advantage if Europe can finally keep the talent it attracts: \u201cIf you’re able to retain the talent that we are attracting in Europe, because people are what makes these startups and make innovations, then that could a big advantage,\u201d she said.<\/p>\n

Sign up to The Parliament’s weekly newsletter<\/strong><\/p>\n

Every Friday our editorial team goes behind the headlines to offer insight and analysis on the key stories driving the EU agenda. Subscribe for free here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"When the European Commission spent \u20ac387,000 on a party in the metaverse to promote its \u20ac300-billion Global Gateway…\n","protected":false},"author":2,"featured_media":468470,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5174],"tags":[2000,299,5187,1699],"class_list":{"0":"post-468469","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-eu","8":"tag-eu","9":"tag-europe","10":"tag-european","11":"tag-european-union"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115304698103571970","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/468469","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=468469"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/468469\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/468470"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=468469"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=468469"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=468469"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}