Do Foreign Governments Need American Tech?

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Luke Vargas (0:16)

Hey, What's News listeners, it's Sunday, February 22nd. I'm Luke Vargas for The Wall Street Journal, and this is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. And this week, do foreign governments need American tech? Last month, France ordered government workers to stop using Teams, Zoom, Skype, GoToMeeting and WebEx, claiming that their proliferation had made France dependent on non-European actors. And instead, government workers were to use a homegrown communication tool developed by the French state. The move is just the latest example of a growing tech sovereignty trend as countries seek to build their own digital technologies, from communications platforms to AI systems, cloud networks or even chips, and reduce their dependence on the US private sector. Coming up, we'll speak to the man leading France's digital sovereignty push and talk to journal tech reporter Sam Schechner about what it could all mean for Silicon Valley. Let's get right to it. Well the French state may be eager to cut the cord on Silicon Valley, but will digital sovereignty actually become more than a slogan? And what's at stake here for US tech? Journal tech reporter Sam Schechner joins me now. Sam, set the scene for us. What is digital sovereignty and why is everyone in Europe these days talking about it?

Sam Schechner (1:41)

Well something does seem different in the air right now. Certainly after the dust up that maybe isn't quite over around Greenland. And in general, since the arrival of President Trump, I think leaders in Europe have really started to question this transatlantic relationship, which while at times tense, has always been friendly enough to say when push comes to shove, we can rely on their tech. And now in recent weeks, you start to hear more seriously this conversation of like, well, what would we do if our tech was cut off, if we no longer had access to our email or to our cloud storage, or to all of these things that American companies provide in Europe?

Luke Vargas (2:29)

Yeah. I mean, is there actually any risk of that?

Sam Schechner (2:31)

Well, the thing that these countries are confronting is that it is a very, very big lift to separate from US tech. The dependency is just so enormous, not just in Europe, but throughout the Western world.

We're talking a project of decades, not something that you can do over the course of a few months. So an announcement like what France has done with new video conferencing software or they have a Google Docs replacement, I mean, those are achievable things to get your government, bureaucrats and other ministries working on a homegrown solution. It's probably smart because if stuff did get cut off, you really don't want your government to be totally without any solutions. And if you look at the market share just for cloud services, cloud infrastructure in Europe, big data centers, what you have is the top five American providers have something like 83 percent market share according to IDC. That's something that's going to take a long time to shift.

Luke Vargas (3:33)

I mean, situate for us what we believe the vibe to be in Silicon Valley responding to all this.

Sam Schechner (3:38)

I mean, I think they take it super seriously. Europe represents for these big companies upwards of a quarter of their revenue. I mean, it's no joke. It would be a bloodbath if they were cut off somehow from Europe. This has been the case for quite some time. They take it very seriously and that's why they invest so heavily in Europe. So much infrastructure, so much staff. Let's open an AI lab in Paris. Google's AI efforts are headquartered out of London. In that sense, the dependency does go both ways.

Luke Vargas (4:07)

Sam, this tech decoupling is being led by governments like France to develop sovereign tech systems. But surely this also requires a strong private tech sector if there's any hope of rivaling the US.

Sam Schechner (4:18)

The government is not going to build a tech ecosystem, whether they're buying a video conferencing thing for government workers or not. We're talking about technologies that are being built in the private sector. And so the whole, that's the whole game, right? Can Europe build and sustain a vibrant tech ecosystem on its own? And for technologies that already exist, like cloud services, that's something that's been won by the US, but is still important for Europe to catch up in. They don't need new technologies. They just need heavy investment to try to build something that could match the cost of servers run by American companies. For the next tech revolution, there are very vibrant tech ecosystems here. And there's a lot of startups. And when it comes to AI, I mean, one of the most recognized labs is actually a French lab, Mistral. And Chinese labs have shown you don't necessarily need all the resources. There's definitely an open field that AI provides that may give Europe an ability to leapfrog into this tech race. And so I certainly wouldn't count Europe out of the tech race entirely.