As digital breakthroughs redefine global power, no country or region can afford to lag behind. In many ways Europe is a digital success story. The continent has a clear vision for its Digital Decade, long history in digital innovation, and continues to perform well in global indices like digital access, use, skills and jobs.
Nevertheless, complex rules threaten to slow homegrown innovation, an increasingly inward-looking mindset could wall off the continent from the world's best technology, and fragmented investments in AI and connectivity are leaving European businesses behind. Unless Europe acts decisively now, it risks turning ambition into inertia and becoming a digital spectator rather than a digital champion.
The time for incremental tweaks is over. Here's how European policy makers can help tear down regulatory barriers and build the high-speed, secure digital foundations that will define this decade.
1. Unleash Growth Through Actual Regulatory Simplification
Europe's competitive edge is being dulled by an ever-growing thicket of complex regulations. Over the last legislative term, more than 60 digital laws were proposed or adopted. While well-intentioned, this overload has become a barrier to investment and innovation, with over 60% of EU companies citing regulation as a key obstacle.
Brussels must accelerate its simplification drive, removing fragmentation, providing timely guidance, and giving businesses the space and certainty to innovate and grow. The European Commission's current simplification agenda is a welcome step in the right direction.
Initiatives like the Digital Omnibus could help streamline rules across cyber, data, and AI. For example, centralising and harmonising cyber incident reporting through a Single Entry Point, as well as providing clearer, more predictable guidance on the Cyber Resilience Act, would cut through unnecessary red tape. Updating the GDPR to fit the AI era and refining the Data Act to better protect trade secrets are crucial to ensuring Europe stays competitive.
Globally, momentum for regulatory streamlining is building. The US Federal Communications Commission's "delete delete delete" initiative systematically eliminates outdated or redundant rules to foster innovation. Europe should launch a regulatory simplification forum with international partners to share best practices, promote digital tools, and coordinate standards in cybersecurity.
2. Strike the Right Balance on Digital Sovereignty
Digital sovereignty is at the heart of Europe's ambition to control its data, technology, and infrastructure. The desire for more control is understandable even more so for public sector and critical infrastructure. However, sovereignty cannot come at the expense of competitiveness, innovation, or access to best-in-class global technologies.
The key is a targeted, risk-based approach. Overly broad sovereignty requirements, such as mandatory domestic hosting or preferential procurement, risk imposing significant economic costs, limiting innovation, and reducing the accessibility to leading digital solutions. According to the European Centre for International Political Economy (ECIPE), broad sovereignty requirements in cloud security could cost the EU up to 3.9% of annual GDP, compared to just 0.2% for a more focused approach.
Europe's digital future depends on organisations having the freedom to choose the technologies and deployment models that best suit their needs, security posture, and ambitions.
Technical standards like ISO 27001 for cloud security provide a strong foundation for security and resilience and should be further leveraged. Ultimately, policymakers should enable choice, applying sovereign controls where truly necessary, and ensuring European businesses have access to the best solutions in the world.
3. Build Strong Foundations and Connectivity for AI
The digital future will be powered by AI, and by the networks and infrastructure that enable it. Yet, Europe faces an innovation and investment gap, slowed by complex regulatory frameworks, high compliance costs, and insufficient investment in both AI and connectivity.
The EU must act now to stimulate investment in secure, resilient, and energy-efficient digital infrastructure. The Digital Networks Act and the Cloud and AI Development Act will provide the opportunity to create a dynamic framework that supports next-generation technologies, especially by harmonising and simplifying regulations, modernising telecoms rules to foster AI-driven innovation, and accelerating the rollout of high-speed, low-latency networks and resilient AI infrastructure.
Concrete steps include ambitious AI funding programmes; a targeted revision of the Open Internet Directive to unlock innovative business models and help properly monetise 5G investments; and access to the upper 6 GHz band for Wi-Fi, which is essential for emerging applications like automated manufacturing, IoT, AR and VR.
AI readiness is often framed around compute but it's about networking and security, too. The 2025 Cisco AI Readiness Index found that only 9% of European firms are fully prepared for AI. As new AI infrastructure is built, security must be embedded from the ground up. Public sector leadership, through early adoption and modern procurement, can set the standard.
Finally, next-generation infrastructure must be energy-efficient, leveraging innovations like AI-powered load balancing, advanced cooling, and interconnectivity between distributed data centres. As the AI compute footprint grows, policy frameworks must set standards for energy efficiency that prioritize quality criteria such as security, resilience, and energy efficiency over origin or price.
Seizing the Moment
Europe's digital leadership will be defined not only by its ambitions, but by its ability to deliver.
Simplifying regulation must go beyond rhetoric: businesses need harmonised, predictable rules to compete and grow. Sovereignty should empower, not restrict European organisations, so that they can access the best technologies and set their own course. And when it comes to AI and connectivity, leadership means urgent investment in secure, energy-efficient infrastructure and fast action to unlock spectrum for next-generation applications.
The regulatory choices, infrastructure investments, and openness to innovation made now will determine whether Europe shapes the next digital era or is shaped by it.
Discover more about Cisco's vision and policy recommendation to secure the digital foundation that will define Europe's future on our microsite.