EU’s War on US Big Tech is Handing China the Future

This article is part of a series of articles authored by young, aspiring China scholars under the Future CHOICE initiative.

The EU has spent years cracking down on US tech giants. While Brussels sees this as a win for competition and consumer rights, the real winner is China.

Once, conventional wisdom held that the US drives global innovation, Europe regulates it, and China merely imitates it. That worldview is outdated. Yet the EU remains stuck in the same loop – focusing on overcautious regulation over technological breakthroughs – while China charges ahead in artificial intelligence and quantum computing, positioning itself as the world’s next Silicon Valley. EU antitrust efforts, particularly the widely criticized Digital Markets Act, Digital Services Act, and AI Act, are inadvertently paving the way for Beijing.

Beijing Builds, Brussels Regulates

China is not just talking about tech dominance – it is investing at an unprecedented scale. Companies like Tencent and Alibaba are pouring billions into AI infrastructure, cloud computing, and quantum research. ByteDance, TikTok’s parent company, has set aside over $20 billion for data centers and networking alone. And then there’s Origin Quantum, the Chinese startup that just announced a major milestone: its Wukong quantum computer now boasts 72 working qubits and has attracted researchers from over 130 countries, including the US.

China is also outpacing the West in quantum communications, an area critical for cybersecurity and next-generation encryption. While the EU debates how to regulate emerging technologies, China is busy setting its own quantum encryption standards which could soon challenge Western dominance in secure communications.

The EU is Targeting the Wrong Enemy

Rather than strengthening its own tech sector, the EU has chosen to go after the very companies that drive Western technological leadership. The Digital Markets and Services Acts are forcing American companies into costly compliance battles that drain resources and stifle innovation.

While the US and EU bicker over trade and regulation, China is strategically expanding its high-tech influence. Despite facing a record number of WTO trade investigations, China’s massive exports continue to flood global markets, with its long-term ambitions largely undeterred. Yet instead of confronting this real challenge, the European Commission, already struggling to curb the flood of Chinese goods, is doubling down on regulations that hurt American tech firms.

The EU claims these laws create a fairer digital economy. In reality, they disproportionately hurt US companies. Europe lacks its own tech giants, and instead of fostering them, it imposes burdensome rules which make life harder for the few that do exist. Meanwhile, Chinese companies face few such restrictions at home. While American firms are busy navigating EU bureaucracy, their Chinese counterparts are free to expand, innovate, and out-maneuver them.

Time to Team Up or Fall Behind

Silicon Valley became the global tech hub thanks to its culture of risk-taking, investment, and minimal government interference. China is now replicating this model, but with state-backed funding and long-term strategic planning on a scale the West has never seen.

Even top European officials acknowledge strategic missteps. EU foreign policy chief Kaja Kallas recently admitted China is “laughing on the side” as trade disputes between the US and Europe escalate. She openly warned that Beijing stands to benefit from Western infighting.

If this trend continues, the next major breakthroughs in AI and quantum computing may not come from California, but from Shenzhen. That’s why the US and Europe need to stop playing defense and start thinking strategically. Instead of imposing endless fines and regulations, the focus should be on strengthening Western tech leaders and ensuring they stay at the forefront of innovation.

Stop Fighting, Start Building

The US and the EU should be working together to build stronger tech policies, not bickering over how much to fine American firms. A united Western front on AI and quantum research is essential to counter China’s rise. While regulation plays a vital role in the EU’s framework, European policymakers must reflect on whether the current extent of their regulatory regime is stifling rather than enabling innovation. Instead of erecting barriers for US tech firms, many of which are crucial to the West’s technological leadership, the focus should shift toward fostering a more balanced environment that encourages homegrown innovation without overburdening the ecosystem.

The US and EU must recognize that technological leadership is deeply intertwined with the broader geopolitical landscape. Greater investment in innovation is vital, especially when China’s public and private sectors work in concert to finance strategic industries. If Western tech companies are forced to fight their own governments and foreign competitors at the same time, they will lose.

If EU regulations are seen as disproportionately targeting US firms, they risk deepening transatlantic tensions, something already reflected in Washington’s pushback. Rather than fueling a tit-for-tat dynamic, EU policymakers should focus on recalibrating the balance: maintaining fair competition while strengthening cooperation vital to shared tech leadership. Antitrust should support, not hinder, Europe’s innovation goals. While China’s tech rise is notable, it has relied heavily on Western and Northeast Asian ecosystems. The next Silicon Valley doesn’t have to be in China, but without a smarter, more balanced strategy, Europe may lose ground in shaping the future of emerging technologies.