European Union officials are floating a plan to create a sovereign wealth fund intended to invest in companies that could compete with U.S. and Chinese tech giants. According to an internal document detailing the plan, the fund would be called the “European Future Fund” and would hold 100 billion euros ($110 billion) to invest in “high-potential European companies.” The 173-page plan lists both American tech giants, including Google, Apple, Amazon, Microsoft and Facebook, and Chinese firms Baidu, Alibaba and Tencent as competing companies.
Right now, Europe has no tech companies that could realistically compete with the largest American and Chinese tech companies. The American firms are up to 100 times more valuable than Europe’s top tier tech companies with market capitalizations now sometimes topping $1 trillion dollars. The draft document says: “This presents a risk to growth, jobs, and to Europe’s influence in key strategic sectors.”
The new fund would use money from the EU budget currently earmarked for venture capital, research funding, and regional development. For now, the plans are just part of a wish list. If accepted by European Commission president-elect Ursula von der Leyen, the Fund would need to be agreed to by both the European Parliament and national European governments. It is unclear whether the proposal would gain traction among EU member states.
Europe has taken on a leading role on the regulation of big tech companies despite having few of its own. Over the past five years, Europe has enacted stringent data privacy laws aimed at the biggest tech and social media companies, as well as issues tens of billions of dollars in antitrust fines and tax recovery orders against the companies. The proposed new fund marks a shift from the market-friendly incentives the EU previously proposed towards direct intervention in markets that appear to be leaving Europe behind.