A new tech race is on. Can Europe learn from the ones it lost?

BRUSSELS — As Europe prepares to enter a new technology race, the hurdles it faces to beat out the U.S. and China are all too familiar.

After rapidly falling behind in the global rush to artificial intelligence, Brussels has a fresh chance at an economic success story in the emerging field of quantum technology.

But in a new strategy to be released Wednesday, the EU will warn that promising homegrown quantum tech risks being snatched up to make money abroad as the bloc continues to lag in turning research into “real-market opportunities,” according to a draft seen by POLITICO.

“Europe attracts only five percent of the global private quantum funding, compared to over 50 percent captured by the U.S. and 40 percent by China,” the undated draft read.

Governments and technology companies — most notably in the U.S. — are plowing billions into the quantum wave, which would be revolutionary because quantum computers would surpass the problem-solving capacities of current computers by vast orders of magnitude, revolutionizing industries from communications to drug development.

Europe is the global leader in the number of scientific publications on the technology.

“Europe has been falling behind [when it] comes to the technology in many sectors. This sector is something where we are several years ahead of other countries,” said Juha Vartiainen, co-founder of the Finnish quantum computing company IQM.

But in the race to commercialize that research, Europe risks falling behind quickly, ranking only third in patents filed, behind the U.S. and China.

To many, it’s déjà vu. Europe is generally best in class in the research that precedes revolutionary technologies, as it was in artificial intelligence. But the U.S. and China leapfrogged the continent in building the companies to deploy mass-market applications.

A major point of debate is whether Europe will give its quantum industry free rein. Quantum computers are considered sensitive technology since they are expected to break the digital encryption that protects data and communications from being surveilled and stolen — making the technology a matter of national security.

Several European governments have already imposed export restrictions.

Cash flow problems

U.S. tech giant IBM recently announced it expects to have the first workable quantum computer by 2029 — adding urgency to the timeline for Europe to get its house in order.

For decades, Europe has failed to overcome its fragmented financial market and pool funding on the scale that the U.S. and China can provide. Efforts to overcome the barriers to investment through a bloc-wide capital markets union have yielded no significant outcomes.

The strategy notes significantly more investment will be needed to roll out reliable technology that is widely adopted by several industries.

“Raising a scale-up in Europe is super difficult, because we lack the European instruments, the European venture capital … large enough to support that,” said Enrique Lizaso, CEO of Spanish software company Multiverse Computing, which is crossing quantum-inspired software applications with artificial intelligence.

Multiverse last month raised €189 million in a funding round that included both U.S.-based and European investors.

Lizaso said that if Europe wants to help scale its companies it must be prepared to invest €100 million per company, “which is what you’re going to have from the U.S.”

According to IQM’s Vartiainen, “we would need to have funding levels which are significantly larger than they have been so far.”

In an interview Tuesday, the EU’s tech commissioner Henna Virkkunen said that Brussels and the capitals have jointly funded quantum technology with €11 billion. “Now it’s important, because we are quite fragmented, that we are putting different dots together,” she said.

Picking winners

Both Brussels and EU capitals have rolled out public funding plans to complement private funding, but the industry fears these are insufficient and lack focus.

Europe’s approach has been to be “technology-neutral” and fund several strands of quantum technology, Vartiainen said, but spreading out funding can dilute its impact. Europe should follow the U.S. example of unlocking larger investments for focused “challenges,” he said.

Under a program led by the U.S. government’s DARPA defense research agency, 18 companies have been selected as part of a larger bid to come up with an error-free quantum computer by 2033. Those companies could reportedly tap up to $300 million if they pass all the stages.

The EU’s draft strategy promises to launch “two grand challenges” between 2025 and 2027, with one focused on quantum computing and another on quantum navigation systems in “critical environments.”

Another way for governments to support companies to commercialize the technology would be if they are the primary buyers of technology, which then lowers the bar for the industry to follow suit.

The draft strategy said the Commission would “support innovation-oriented procurement schemes,” but didn’t offer much detail on how it would do so.

Companies are adamant on what they don’t want from Brussels: regulation and restrictions on quantum technology, like restrictions on the export of the technology.

Some industry voices have warned that the EU’s approach to regulating AI offers a cautionary tale. Worried about the potential harms of the technology, the EU rolled out the world’s first AI rulebook, only to quickly backtrack to focus on AI innovation and commercial success.

“We cannot afford to regulate what is not yet mature,” said Cecilia Bonefeld-Dahl, director general of DigitalEurope, one of Brussels’ leading tech lobbies. “Otherwise, Europe risks losing the quantum race.”