The 2020s had started so brightly: Europe had been catching up with other regions in terms of tech start-up activity and IPOs. But as the decade progressed, there was a gradual implosion in tech entrepreneurship. Emboldened by informal acclaim as the world’s tech regulator in the area of privacy and data protection, officials doubled down and introduced additional, more restrictive regulation on the technology sector.
Its ostensible intent was to protect the consumer; the outcome was a diminished tech sector. The companies most able to prepare and adhere to new regulations were the largest, global tech companies. By contrast, less capitalised European start-ups and tech companies struggled to deploy sufficient resources to comply with incoming regulations in a timely manner and had less funds to invest in growth. Greater regulation of technology became a barrier to entry, and a disincentive to entrepreneurs, who switched sector, or left the region. Consequently, the European consumer ended up with constrained choice and, occasionally, higher prices.
And so, by 2030, Europe was what some termed a tech desert. Its home-grown technology sector had shrivelled, and foreign tech companies no longer regarded Europe a primary market to sell into the region. European companies from all industries spent less on technology than their global counterparts. European universities, which had been growing their technology research departments, reversed course.
The European economy shrank in tandem with the diminishing role of the European technology sector. Throughout the 2020s, technology was increasingly being deployed around the world to make businesses digital at their core, and more productive and competitive as a result. This wave of digital investment, known as the transforming twenties, had been catalysed by the shock of the global pandemic at the start of the decade. The existential shocks many companies had faced galvanised them into accelerating their digitization plans. Tech suppliers scrambled to accommodate this surge in demand; those that managed saw their valuations soar, with a dozen companies worth over a trillion dollars by the mid-point of the decade.
Europe was the exception, where new regulation, particularly concerning patents, data, privacy, investments and sustainability ended up throttling the supply and demand for technology. Regulations were well-meant – intended to protect people and the planet – but the regulations lacked nuance, and so ended up casting out the proverbial baby along with the bath water.
One example of misshapen policy is the fate of the smartphone sector. As of 2020, the smartphone supported trillions of dollars of economic activity annually in Europe -- despite there being no major European smartphone brands. The region’s mobile networks relied on annually updated smartphones from global vendors to drive demand for larger data packages, and to justify upgrades to European-built 5G networks. European tech provided the underlying architecture for every smartphone, and its algorithms enabled tiny smartphone cameras to out-perform digital SLR cameras in all light conditions. Office workers relied on the devices to stay informed. The European logistics industry’s business models depended on the availability of smartphones and mobile networks. Governments around Europe had moved most major customer-facing processes to self-service apps, driving significant efficiencies. The automotive industry was able to reverse rising rates of car theft by digitising the key into an app on a smartphone. The creative industry made music, games and memes for small screens.
However, by 2030, most major smartphone vendors had scaled back their focus on Europe as the primary go-to market for their latest innovations. This was the culmination of a five-year exodus that could readily have been averted, and which could, with changes in policy, still be reversed within a year.
The start of the end was a mandate in 2024 to use a European designed charging cable. This required a major re-design of devices to accommodate an additional port. This was followed in 2025 by the mandate that any smartphone sold in Europe had to offer security updates for at least six years. This prompted smaller vendors, including those specialised in industrial applications such as delivery and inspection to exit the market. They were unable to afford this commitment. The proposal all batteries, processors and screens should be user-replaceable by 2028 prompted premium vendors to defer releases of their latest products.
As a result, some sectors, such as instant grocery delivery, which had generated multiple unicorns as of 2021, decided to abandon the parts of the European market that their preferred device vendors had exited from.
The mobile video games sector, which had been thriving in Europe, shifted outside the region, as it became increasingly hard to build and test apps for the latest devices.
Retailers, which had been developing ever more attractive mobile sites, were forced to build content optimised for ever older phones, leading to the exit of the best app developers who left for markets where they could build for the latest technology.
As tech companies of all types departed, they left economic craters. The impact of each departure was minimal at a European level, but painful and high-profile in the cities and towns that had been abandoned. As more and more tech companies shifted their focus abroad, leaders in individual countries started questioning regional policy.
In 2030, there is still a projected $43 billion of research and development investment, with increasing funding coming from regional and national governments to compensate from the decline in private investment. Funding was limited to areas adhering to European values, namely cloud computing, virtual reality, remote surgery, quantum computing and ethical AI. However, the real-world applications for quantum similarly remained in the distant future, as had been the case in 2020, 2010 and 2000.
Future of the Tech Sector in EuropeThe scenarios