Issue #6 - September 11, 2025

Draghi's report celebrates its first anniversary with still a lot of attention but little action taken

A year ago, former President of the EU Central bank and PM of Italy Mario Draghi published an ambitious report to regain the EU's competitiveness and help inform the new EU Commission to become again an innovation powerhouse. The main surprise at the time was that a technocratic report of hundreds of pages would gain so much political and media attention, but it also confirmed the profound unease of the EU and its industries at large towards the capacity of the EU to meaningfully stay on track when compared to the US and China.

A year later, it's hard to cite any major recommendation of the report being carried out. It's not because of a lack of interest in the issues. Almost every week a heavyweight EU industry leader provides his view on what should be done, and the EU Commission has equally treated Draghi's report with a red carpet approach. But despite all the good intentions many obstacles remain. One is due to member states unwilling to put the EU ahead of their own economy when it comes to structural reforms such as creating a single market for energy or telecommunications. Capital markets are on the table but to be truly successful, it will also require Europeans to invest in risky stock markets, something that is very far from their saving habits.

Another obstacle is the foreign policy and tariff negotiation that the US has imposed on the EU and has put the continent on a passive approach to avoid making things worse. The impact has been to force the EU to adopt a low hanging fruit policy strategy composed of prioritizing a so-called "technological sovereignty" approach that would promote buying European while trying to defend its recent tech regulations that are aimed at protecting its EU citizens from harmful online content and to promote a fair competition in the tech sector. The latter has been pointed out by the US administration as unfair practices and indirect levies against the US since its largest tech companies are in scope. The former may prove to be hard to materialise given the heavy reliance of the EU towards US technology.

While Draghi's main message has been to remind the EU that innovation must be taken way more seriously, the EU is still unable to put on the table a convincing long-term strategy on innovation. One year after the publication of the report, that should be considered a sounding alarm.

ASML heavily invests in Mistral.AI, Europe's last hope on GenAI

A record investment round of €1.7bn for a €11.7bn post-money valuation has instantly positioned Mistral AI as one of the most successful tech companies the EU has ever had. In this new round, ASML brings by far the largest ticket with an investment of €1.3bn. This investment represents an immense political success for the EU and France that can show that Europe can defend and invest in its own tech industry.

This investment also demonstrates how hardware and software are deeply intertwined in the field of GenAI. ASML, a Dutch lithography chip leader, has become a strategic asset in the complex supply chain of chipmaking, by being the only company able to provide the "printer" to manufacture the nano chips that are powering the latest generation of iPhones, but also the most advanced GPUs that are necessary to train GenAI models.

Mistral AI remains the last company in Europe to train GenAI models. It competes with US heavyweights that outpace by far the size of Mistral even after its latest investment round. Two of its main competitors OpenAI and Anthropic are respectively valued at $500bn and $183bn. The very intensive capital burning of the sector could quickly put Mistral out of the game, but the success of the Chinese startup DeepSeek has questioned whether burning cash is the only approach to stay in the game.

Mistral's success will also depend on the "buy European" call made by politicians across the continent. A recent report from the FT has suggested the startup could have gained traction from a recent line up of contracts issued by EU industry players.

What I have been reading

The Big Tech problem for European business, The Financial Times, Sep 10 2025

In this opinion piece, Barbara Moens argues that the certainty that the EU industry has been calling for is far from being confirmed despite the trade deal signed with the US. The US is still floating the idea that EU tech regulation is preventing the trade deal from being fully adopted. While Von der Layen has pushed for a quick deal to create economic stability, EU industry is slowly acknowledging that instability could be part of the new normal.

Robotaxis will be the Sputnik Moment for a declining Europe, The Economist, Sep 4th 2025

The Economist wonders whether EU citizens may soon realize how far we have been outpaced by China or the US after experiencing the joy of riding a robotaxi in one of these countries, something that seems to be far from being an upcoming reality in our old continent. The journalist cites the risk of cannibalisation that could have slowed down the appetite of European car makers towards self-driving cars. Lack of innovation investment is also to be blamed, and the temptation of increasing tariffs from US and Chinese self-driving cars to give more time to Europe to catch up. Truth is so far the question of self-driving cars in large EU cities seems to have been completely out of the political debate. Maybe we should simply start with that?