Final Response to the Commission's EU Startup and Scaleup Strategy Call for Evidence

Here is our position paper of the EuroStack Project, which was submitted in response to the European Commission's Call for Evidence on the EU Startup and Scaleup Strategy. As the Commission states:

Start-ups and scale-ups are crucial for the EU’s competitiveness. They often bring to the market breakthrough innovative solutions for societal challenges. However, their growth is still hindered by barriers, including difficulties in accessing private capital in the EU and in selling seamlessly across the single market.
The Strategy contains a set of policy, financial and legislative measures to improve and simplify framework conditions for start-ups and scale-ups.

This document specifically addresses the challenges faced by European startups and scale-ups in the digital sector. The Commission rightly identifies the crucial role of these companies in driving innovation and competitiveness, and acknowledges the barriers hindering their growth. However, we believe that the proposed "set of policy, financial and legislative measures" must go further, fundamentally reshaping the Single Market to achieve true digital sovereignty and create a level playing field for European innovators. We present a critical analysis of the current digital landscape, arguing that the dominance of non-European tech giants, coupled with a lack of enforceable interoperability and an over-reliance on proprietary solutions, poses a systemic threat to the success of European startups and scale-ups.

Drawing upon the principles of Open Source software, strategic autonomy, and SME empowerment, we propose a comprehensive framework that goes beyond simply "improving and simplifying" existing conditions. We advocate for a transformative shift towards a Single Market built upon European values, open standards, and a thriving ecosystem of European digital businesses. Our recommendations offer a concrete roadmap for building a resilient, competitive, and values-driven digital future, where European startups and scale-ups can not only survive but thrive.

Additionally, we still encourage anyone who shares our concerns to submit their own answer to the consultation. Note that the deadline is the 17th of March 2025.

Response to the Commission's EU Startup and Scaleup Strategy Call for Evidence – From the EuroStack Project

To: The European Commission
From: The EuroStack Project (www.euro-stack.com)
Date: 16 March 2025
Subject: Response to the Call for Evidence on the EU Startup and Scaleup Strategy
Status: Final (v1.0)

The EuroStack Project (ESP) welcomes the European Commission's initiative to develop an EU Startup and Scaleup Strategy. We believe this strategy is crucial, but true competitiveness and resilience require a fundamental shift towards digital sovereignty based on Open Source principles and leveraging the wealth of existing European solutions. This is not just a matter of economic policy; it is an existential imperative.

Recent events – such as President Trump's return to protectionist trade policies and the imminent collapse of the Transatlantic Data Privacy Framework – underscore the urgent need for Europe to control its digital destiny. This strategy must go beyond addressing surface-level hurdles. It must tackle the core issue of Europe's over-reliance on non-European technology providers, recognizing that, as Euclidia powerfully stated in 2022, "Everything already exists in Europe" to build a sovereign cloud. The EuroStack Project, aligned with other initiatives and alliances such as Euclidia, APELL, the EuroStack Initiative, and others, advocates for a comprehensive approach to build a truly independent and sovereign digital future for Europe, now. We must act now, before it is too late.

We must also acknowledge a difficult truth: Many European startups, and the venture capital firms that fund them, aspire to be acquired by large, often American, tech companies. While individual exits can be financially rewarding, at scale, this dynamic undermines European digital sovereignty. It creates a brain drain, transfers valuable intellectual property out of Europe, and reinforces the dominance of non-European platforms. The EU Startup and Scaleup Strategy must address this challenge directly, fostering an ecosystem where European startups can scale independently and become global leaders in their own right, retaining their European identity and control. Hence, the goal should not be to create attractive acquisition targets for foreign companies, but to build enduring European champions.

Q1. Do you agree that startups and/or scaleups face the hurdles identified in this document (access to finance, regulatory and bureaucratic burdens and fragmentation, access to markets, access to talent, and access to infrastructure, knowledge and services)?

Partially Agree, but with Critical Caveats:

While the identified hurdles are real, they are symptoms of a deeper problem: the lack of a cohesive, sovereign European digital infrastructure built on European solutions. Addressing these symptoms in isolation is akin to treating the disease without addressing the cause. The root cause is Europe's dependence on non-European tech giants. This dependence creates:

Uneven Playing Field: European startups and scaleups compete with established hyperscalers who often benefit from dominant market positions, preferential treatment, and extraterritorial legal frameworks.
Vendor Lock-in: Proprietary solutions and platforms create dependence, hindering innovation, limiting choices, and increasing costs for European businesses.
Data Sovereignty Risks: European data is often stored and processed outside of European jurisdiction, creating legal and security vulnerabilities, as demonstrated by the recent threats to the TADPF.
Innovation Stifling: The dominance of a few large players can stifle innovation and limit the growth potential of European startups, preventing the emergence of a vibrant, SME-driven ecosystem.
Lack of Interoperability: The current fragmented landscape, dominated by proprietary systems, makes it difficult for European companies to collaborate and share data effectively.

Q2. Are there any additional hurdles faced by startups and/or scaleups?

Yes, several critical hurdles are not adequately addressed:

Lack of a Sovereign Digital Foundation: Europe lacks a comprehensive, interoperable, and open-source-based digital infrastructure built on existing European technologies. This forces startups to build on non-European platforms, perpetuating dependence. The "EuroStack Vision", as defined and refined by various actors in the last year, is the blueprint for this missing foundation: a modular, scalable, and open digital infrastructure, built upon and interconnecting existing European solutions, and prioritizing open source, interoperability, and European control.
Dominance of Hyperscalers: The overwhelming market power of non-European tech giants creates significant barriers to entry and growth, controlling critical infrastructure, data, and market access.
"Piggybacking" on US Cloud Infrastructure: European startups and scale-ups are overwhelmingly reliant on US-based cloud providers (AWS, Google Cloud, Microsoft Azure) for their infrastructure needs. This creates a fundamental dependency, undermining data sovereignty, exposing businesses to extraterritorial laws, and limiting the growth of a competitive European cloud market. Even some "European" cloud offerings are built on top of these underlying platforms or technologies.
Extraterritorial Laws: Laws like the US CLOUD Act and FISA pose significant risks to European data sovereignty and business continuity.
Lack of Open Source Prioritization: Public procurement and funding mechanisms often fail to prioritize existing European Open Source solutions, hindering the growth of a vibrant European Open Source ecosystem.
Insufficient Support for Open Source Maintenance: Many critical European Open Source projects lack sustainable funding, jeopardizing their long-term viability.
Lack of Enforced Interoperability: The absence of enforced interoperability standards prevents European startups from seamlessly integrating their solutions, hindering the creation of a cohesive European digital ecosystem.
Dependence on Non-european Hardware: dependence on foreign-made hardware is a strategic vulnerability.
Market Concentration Among Foreign Hyperscalers: creates unfair competition.
Regulatory Burdens: Initiatives like the Cyber Resilience Act (CRA), while well-intentioned, will place disproportionate burdens on European SMEs and Open Source projects if not carefully implemented.

Q3. What actions do you think the EU and/or its Member States should take to address these hurdles?

The EU and its Member States must adopt a bold and decisive strategy and prioritize digital sovereignty, leverage existing European Open Source solutions, and actively promote a thriving European SME ecosystem. This requires a fundamental shift in approach, encompassing:

A. Foundational Principles

Open Source First: Mandate the use of existing European Open Source software as the default choice for all publicly funded digital infrastructure and services. "Public Money, Public Code" must be a core principle, both for R&D&I funding and for public procurement.
Enforced Interoperability: Establish and enforce mandatory, open standards for data formats, APIs, and communication protocols to ensure seamless integration, prevent vendor lock-in, and empower European SMEs. This must go beyond mere recommendations; it requires legally binding requirements, robust testing and certification mechanisms, and clear penalties for non-compliance, as highlighted by the recent CJEU ruling against Google, and detailed in our position paper on interoperability.
Data Sovereignty: Ensure that European data is stored and processed under European jurisdiction, with strict adherence to GDPR and robust privacy protections.
Everything Exists in Europe: Prioritize existing, proven European solutions, recognizing that we do not need to "reinvent the wheel." Leverage technology and solution directories like euro-stack.com and cloudrepo.eu.
Vendor Neutrality: Promote competition and avoid monopolies by adopting vendor-neutral platforms and standards, actively favoring European solutions.
Security by Design: Embed security and privacy into the core of all digital solutions, adopting a Zero Trust architecture, addressing supply chain security (including hardware), and utilizing strong, open cryptographic standards.

B. Concrete Actions

Establish and Promote the EuroStack: Create, sustain, and promote a comprehensive, modular, and interoperable digital infrastructure, building upon and integrating existing European Open Source technologies. The EuroStack Directory Project (ESDP), inspired by and complementary to Euclidia's cloudrepo.eu and other directories, will be a key component, providing a catalog of vetted European solutions.
Prioritize European Open Source in Public Procurement: Mandate the use of existing European Open Source solutions in public procurement, providing clear preferences and incentives for European SMEs. Procurement should be a strategic tool for building European digital sovereignty. Actively disfavor non-European solutions when a viable European alternative exists, even if it initially means a slightly higher cost or fewer features. This should be framed as "strategic procurement" based on objective criteria (security, interoperability, data sovereignty, long-term cost-effectiveness, contribution to the European digital ecosystem) to avoid violating WTO rules. Arguments based on the "cultural exception" and "national security" exemptions within WTO rules should also be explored.
Strategic Investment: Direct significant public and private investment towards existing European-grown open source technologies, SMEs, and initiatives that strengthen European contributions to and influence over key open-source projects. Leverage European institutional investors.
Sustainable Funding for Open Source: Provide long-term, sustainable funding – primarily through direct contracts, not just subsidies – for existing European Open Source projects critical to European sovereignty. This includes funding for maintenance, security audits, and community development.
Support European SMEs: Structure public procurement, funding, and tax incentives to explicitly favor European SMEs and Open Source projects. Provide SMEs with the tools, resources, knowledge, and market access to compete effectively with hyperscalers. Advocate for SME-friendly regulations, including exemptions from overly burdensome requirements in initiatives like EUCS and CRA, and streamlined compliance processes. A dedicated "European Small Business Act" for the digital sector should be considered.
Education and Skills: Develop digital skills training programs focused on Open Source and cloud technologies, fostering a culture of openness, self-reliance, and European expertise. These programs should emphasize not just technical skills but also the strategic and ethical implications of technology choices.
Bottom-Up Governance: Establish clear, bottom-up governance frameworks for public-private collaborations and digital infrastructure, ensuring transparency, accountability, and SME inclusion.
Counter Hyperscaler Dominance: Actively address the market dominance of non-European tech giants through regulatory measures, stronger antitrust actions, competition policy, and strategic investments in existing European alternatives.
Mandate Data Residency: Enforce strict data residency requirements for sensitive data, ensuring it remains under European jurisdiction.
Promote a European Cloud-Edge Continuum: Develop a vendor-neutral, European-led cloud-edge ecosystem based on Open Source, enabling workload portability and user control.
Reject the Failed Gaia-X Approach and Embrace a New Direction: The Commission must publicly acknowledge the shortcomings of Gaia-X – namely, its lack of independence from non-European hyperscalers, its bureaucratic complexity, its lack of tangible results, and its failure to sufficiently prioritize open source. Instead of replicating this flawed model, the EU should embrace an agile, bottom-up, SME-driven approach.
Define and Track Metrics: Establish clear, measurable, achievable, relevant, and time-bound (SMART) metrics to assess the progress and impact of the strategy, including metrics specifically tracking the adoption of existing European solutions and the growth of European SMEs. As an example, after establishing a baseline based on an internal audit of its IT spending practices, the Commission should develop an ambitious plan to spend 90% of its IT budget on European-supported interoperable Open Source solutions by 2035.
Foster European Hardware Independence: Support the development of European-based hardware solutions, or guarantee sourcing from trusted European manufacturers.
Promote European Leadership in Emerging Tech: Dedicate a framework with funding to put Europe at the forefront of Cloud and AI innovation. This includes supporting the development of Open Source AI models and frameworks.
Support European Contributions to Key Open Source Projects:
- Establish funding mechanisms to support European developers and maintainers working on critical open-source projects, regardless of where those projects are primarily hosted. This could include grants, fellowships, and direct contracts.
- Encourage European companies and public administrations to actively contribute code, documentation, and financial support to open-source projects.
- Promote the creation of European branches or foundations for key open-source projects to ensure greater European influence.
- Foster a stronger European open-source community through networking events, conferences, and online platforms.
- Support the development of European Open Source Program Offices (OSPOs).

Conclusion

The EU Startup and Scaleup Strategy must be a transformative initiative that establishes a truly sovereign and competitive European digital ecosystem. We must recognize that fostering successful European startups is not solely about creating attractive acquisition targets for foreign companies. It is about building enduring, independent European champions that contribute to our long-term strategic autonomy. Our vision puts the emphasis on existing European Open Source technologies and solutions, enforceable interoperability, SME empowerment, and European values, provides a clear roadmap. We urge the Commission to embrace this vision. Adopt a bold, decisive strategy that prioritizes European digital independence by leveraging the innovative power of existing European solutions and SMEs. The time to act is now. The failures of the past must not be repeated. Let us choose to build, not to surrender. The Commission must demonstrate, through concrete actions and policy decisions, that it is serious about achieving digital sovereignty, not just talking about it. The future of Europe's digital economy, and indeed its overall resilience, depends on it.

We call on the European Commission to move beyond rhetoric and take immediate, concrete action to build a digital future where European startups can thrive independently, contributing to a truly sovereign and competitive European digital ecosystem.

Who we are

The EuroStack Project is a concrete, action-oriented initiative contributing to the broader EuroStack Initiative, a pan-European movement advocating for digital sovereignty and a thriving, independent European digital ecosystem. We share the Initiative's core belief that Europe's competitiveness, security, and autonomy in the digital age depend on building a digital infrastructure rooted in European values, controlled by European entities, and powered by a diverse ecosystem of European businesses, particularly SMEs. We are independent of, but aligned with, the broader EuroStack Initiative's vision, which calls for a strategic shift towards open source software, enforceable interoperability, and a "Buy European" approach to public procurement.

Our primary activity is the EuroStack Directory Project (ESDP), a curated, comprehensive, and constantly updated online resource. The ESDP catalogs existing European-made and/or European-supported digital solutions, including cloud services, open source technologies, and interoperable tools. This directory is not just a listing; it's a practical tool for businesses, public administrations, and individuals seeking to identify and adopt solutions that align with the principles of digital sovereignty, transparency, security, and sustainability. We vet listed solutions for their adherence to open standards, their commitment to data protection under European jurisdiction, and their contribution to the European digital economy. We actively encourage a "bottom up" approach.

The EuroStack Project is inspired by, and builds upon, the broader "Euro Stack" vision – a concept articulated at the "Toward European Digital Independence" conference in 2024 and further developed by the Initiative and others. This vision calls for a modular, scalable, and interoperable European digital infrastructure, built upon a foundation of open source software and open standards, empowering European businesses and citizens, and reducing reliance on non-European tech giants. We are actively engaged in policy discussions, advocacy efforts, and community building to translate this vision into reality, working in close collaboration with organizations like Euclidia and APELL, that share our commitment to a sovereign European digital future. The EuroStack Project represents a practical, actionable step towards realizing the broader EuroStack vision.