European elections: Will the outcome lead to stronger tech regulation or stronger tech competitiveness?

The European Union parliamentary elections saw a majority of MEPs support stronger technology regulation. Is this in line with the European Competitiveness Movement?

The centre-right European People's Party (EPP) gained strength after winning a landslide election victory, re-electing Ursula von der Leyen of Germany's Christian Democrats to a second term as European Commission president.

Von der Leyen has prioritised green and digital policies (both of which can be said to be hindering European growth), but voters want a different path. A common thread is concern about Europe's lagging competitiveness. In 2008, the EU and US GDPs were roughly the same, at just over $14 trillion, but in 2015, US economic output almost doubled to $27 trillion, while the EU's barely grew at just over $16 trillion. A major competitiveness report by Enrico Letta and Mario Draghi (both former Italian prime ministers) stimulated a debate across political lines.

What actions Europe should take to catch up divides the debate. The EPP is pragmatic and pro-business. It is expected to continue to push for policies that support economic growth and innovation. At the same time, the EPP wants to ringfence Big Tech. They advocate for tough regulations such as the Digital Markets Act, which targets the big US tech companies that Europeans use to access the single market.

This approach is hypocritical: the EPP supports business interests but leans towards protectionism, appearing to prioritise the interests of Europe's incumbents over the expansion of the broader tech ecosystem.

Another important aspect of the election is the growing popularity of far-right parties, which are already in power in Italy and may soon form a government in France. Marine Le Pen's National Front won its highest number of votes ever in the first round of parliamentary voting, as President Emmanuel Macron's centrist party was on the verge of collapse. Le Pen and other far-right parties made great strides in the European Parliament, becoming the third largest political group.

The far-right is opposed to the Digital Services Act, which was enacted to combat illegal content online, from hate speech to dangerous toys and cosmetics. Far-right representatives, including Belgian MEP Tom Vandendriessche and French National Rally MEP Mathilde Androuet, say the law needs to clarify the definition of hate speech and make it easier to criticize immigrants.

The far right has historically been skeptical of European integration, and one would expect hostility towards foreign technology, whether Chinese or American, and towards attracting foreign talent to Europe, which is essential to propelling tech start-ups.

Meanwhile, on the political front, the Pirate Party, known for its strong opposition to digital advertising, suffered major setbacks, dropping from three seats to one in the Czech Republic (where it has historically been one of the most popular parties). Marcel Kollaja, a prominent Czech lawmaker who was seen as a possible candidate for the country's next European Commissioner, failed to win a seat. Similarly, Anja Hirschel, head of the Pirate Party in Germany, also failed to win election.

The Pirates' defeat shows that their niche focus on digital privacy and open operating systems failed to sway voters, who prioritized the economic issues that matter to their lives.

The strengthening of the pro-business European People's Party (EPP), the decline of tech-focused MEPs, and the rise of anti-regulation far-right forces suggest that European politicians may be wary of significantly increasing their intervention in the digital economy. The focus will likely be on enforcing existing laws.

Hopefully, there will be room for substantive discussion about a forward-looking vision for European tech policy. The continent needs a balanced approach that promotes innovation and investment while protecting its citizens. This means finding mechanisms to improve single market integration and overcome far-right opposition. It also means attracting top talent and venture capital, which might benefit from an anti-Trump backlash.

The new European Parliament elections are just the first step. Political parties and national political leaders will now negotiate top posts and committee seats. So far, centrists have captured key leadership positions, including European Commission President von der Leyen, Foreign Policy Director Kaija Kallas and European Council President Antonio Costa. The far-right has been kept out of power in Brussels, even as it threatens to seize power in Paris.

European leaders must foster a strong, competitive European technology sector. Only when Europeans have access to the world's best digital tools can the continent close its competitiveness gap.