Nick Clegg, president of global affairs at Meta/Facebook, expressed a bleary myopic conceit in his article: “Europe is no longer producing world-class companies”.
Clegg observed that, 30 years ago, Europe represented about a quarter of global GDP but has now fallen behind, with the European Union GDP per capita only half that of the United States. This may be true in nominal terms but purchasing power parity is a more reasonable measure for the public. If a pint of Guinness in Dublin costs €7, but €8 in New York, then I get more yeast for my yoyo in Dublin.
Bruegel, a Belgian not-for-profit economic analysis team, applying this principle across a basket of goods and correcting for exchange rate fluctuations, shows that in 2022 the EU economy was just 4 per cent smaller than that of the US despite the EU expansion with former communist states.
Clegg claimed that, globally, none of the top 10 unicorns (start-ups valued at more than $1 billion) is European. He missed Europe’s Revolut, the eighth largest unicorn worldwide.
Clegg asserted that none of the top 50 European companies was founded within the last 30 years. In fact there are seven, including Adyen (the Dutch payments company), Prosus (the Dutch internet group) and Spotify (the Swedish streaming company).
The Meta frontman noted that there are four times as many semiconductor plants planned for China than for Europe. However, he overlooked that Europe holds a chokehold over the entire global semiconductor industry. ASML, the second most valuable company in Europe, is almost the sole supplier worldwide of advanced lithography equipment, without which the semiconductor industry would collapse.
Clegg also neglected the challenges faced by the US wireless sector. The US has had a fragmented wireless network market with mismatched cellular areas under the Federal Communications Commission (FCC) and attempted customer lock-in by operators. The US has consequently lost considerable momentum while Europe has a more harmonised approach that has benefited Ericsson and Nokia as tier-one global players.
Clegg reflected that, in the US, just one of the top 10 electric vehicle brands is European. Maybe so in America, but among the top 10 worldwide sellers of electric vehicles in 2023, Blackridge, a market research company, lists five European companies (BMW, Mercedes-Benz, the Renault/Nissan/Mitsubishi alliance, Stellantis and the VW Group) and just one American (Tesla).
Europe leads the US not only in electric cars: three of the top five electric bus manufacturers worldwide are European, with none from the US. Clegg also forgot that Europe is a long-standing innovator in high-speed trains, with Alstom and Siemens. The US has almost no high-speed trains.
Clegg’s employer, Meta, is hardly a poster child for successful innovation. From the perspective of its shareholders, there have been numerous costly debacles
In aviation, US company Boeing’s fall from grace has been, frankly, disturbing.
Boeing’s evident regulatory capture of the Federal Aviation Authority (FAA) means that both are no longer fully trusted by many overseas aviation regulators and operators. Clegg ignored that Europe’s Airbus is now the leading aviation manufacturer globally, and continues to heavily innovate (for example with its blended wing initiative) in the drive towards low-carbon aviation.
Concurrently ATR, another European company, is the world leader in turboprop regional aircraft, a fuel-efficient approach apparently shunned by the US.
Europe is a leader in green technology and environmental protection. For example Enercon, Nordex, Siemens and Vestas are four of the top five world leaders in the design and manufacture of wind turbines, including at very large scale.
Clegg stated that the EU is no longer a fertile ground for innovation and world-class companies. The above examples show just how wrong he is.
Clegg’s employer, Meta, is hardly a poster child for successful innovation. From the perspective of its shareholders, there have been numerous costly debacles such as Workplace (for companies), CrowdTangle (monitoring virality), Beacon (targeted ads), Credits (virtual currency), Ghostbusters (wiretapping encrypted data), Parse (app development), Libra/diem (cryptocurrency) and Home (Android initiative).
Meta’s metaverse odyssey has been an extraordinary, interminable financial drain for shareholders, with low-margin headset sales and no meaningful impact on group revenues.
Now Meta is again pivoting, this time into generative AI (genAI), and so Clegg wants Europe to embrace Meta’s related open source offerings.
GenAI is certainly a game changer for many industries, but a theoretical underpinning of the technology remains surprisingly elusive. Furthermore, genAI could require a quarter of all US electricity by 2030 according to Arm Holdings, a leading low-power semiconductor design company (founded in Europe but now Japanese-owned).
This is entirely impractical, particularly when the human brain consumes only about the power of a 10-watt light bulb and yet outperforms the intelligence of the current iteration of genAI. Clearly, something is fundamentally wrong with the genAI computing model.
In his rant, Clegg accused Europe of constraining innovation by its digital laws on privacy, copyright and intellectual property. It would be more accurate to observe that here in Europe, surveillance capitalism, libertarianism and invention which ignores societal impact are balanced, if not overruled, by citizens’ prerogatives, consumer data rights and protection of the environment.
Clegg and I thus agree on one point: European values and priorities are indeed different from those of the US.
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