In part 1, we talked about the rise of a Battle of Stacks: “Superpowers are developing their own vision of the digital world and attempt to elevate them to a global standard. This is not merely a battle for economic and international power, but also a battle of ideas about the way we organize our society and the role we assign technology in this.” In this article, we delve into the history of this battle and examine the key players in the field—what author Anu Bradford calls ‘Digital Empires’ and what we will refer to as ‘Stack Superpowers’: the US, China and Europe, with a possible fourth contender—a decentralized Stack. We will then compare these models through a meta-analysis.
Since the early decades following the Second World War, when the digitization of societies and economies took off, contrasting tendencies have prevailed. Digital technology has fostered integration and connectivity, yet, as seen in the tech arms race surrounding the Cold War, the Great Chinese firewall, and the ongoing debate around TikTok, it has also created new dividing lines and boundaries. The same duality applies to centralization and decentralization—Big Tech coexists with blockchain—and to mass behavior and hyper-personalization, where we move in digital herds while each individual has a unique profile tailored for personalized feeds and ads. Today, neither side appears to dominate. While mass platforms with over a billion users remain widespread, we also witness the disintegration of the chip value chain and the fragmentation of social media.
Accordingly, the Battle of Stacks will only intensify as digital superpowers seek to secure their position on this new front. They aim to protect their economies and citizens, establish defensive barriers, and simultaneously remain key suppliers to global markets and standard-setting efforts, extending their influence worldwide.
When did digital technology reach such geo-economic significance? Looking back to the Stacks we had and the slow rise of the new battlefront, the history of the internet offers a nice lens to understand this dynamic. The internet has a well-documented history spanning at least seven decades. A notable precursor to the modern internet is the US Semi-Automatic Ground Environment (SAGE), the first computer network established as a continental defense system against the growing nuclear threat of Russia. Additionally, the ARPANET was also developed during the Cold War, necessitating a resilient infrastructure capable of withstanding central attacks. This led to the adoption of decentralized packet-switching technology, meaning that while the internet has hubs and central nodes, it lacks a single central point of control.
Since the 1980s and 1990s, this decentralized ‘nature’ of the internet has given rise to experimentation of counterculture movements, including hackers and activists, who view the internet as a (partial) solution to issues related to state power, surveillance, top-down governance, or hierarchy in general. Likewise, Western governments saw the internet as a ‘foreign policy’ tool that would help to prop democracy and (business) freedom as cheap connectivity and free information were to empower people and loosen the grip of repressive, authoritarian governments.
As we can observe here, the two seemingly contradictory narratives are always in play when we talk about the internet today. On one side, there is a centralized, top-down, military-industrial perspective that highlights the internet’s origins and ongoing involvement with state power and geopolitical conflicts. On the other side, there is a decentralized, bottom-up narrative that contrasts this primary idea, portraying the internet as an open, universal, transnational and deterritorialized global space. This latter perspective aligns with Marshall McLuhan’s famous concept of the “global village,” emphasizing the internet’s role in connecting people across the world through the electronic highways of the digital era, as we used to call them in the 90s.
As such, the internet embodies a tendency—embedded into the process we call globalization—toward homogeneous digital cultures, frictionless global markets, and widespread digital services, leading to the rise of the “global village” and user bases of billions instead of millions. However, the internet also tends to fragment and isolate, to create new boundaries and parallel worlds, stirring conflict and polarization both within and between countries or superpowers. This is also why we explained The Stack as a vertical map that intersects the horizontal map we are accustomed to.
So, how can we understand our current epoch based on these narratives? Since the 1990s, when the internet began to be commodified, we could say that these contradictory tendencies were not resolved in favor of a universal (neo)liberal world order; instead, they were further catalyzed in this millennium. For a time, it perhaps seemed that the ‘universal’ narrative of the internet was prevailing, as people all over the world started Googling, opened a Facebook account and streamed videos on YouTube, implicitly suggesting a US victory. However, this reading is misguided since China never conformed to the US Stack: Google left China in 2010, while Facebook, Instagram and WhatsApp – part of Meta’s social media empire – are still blocked in China. Over the past decades, China sought to develop its own Big Tech companies and developed its own ‘sovereign internet’. And more countries have followed suit, such as Russia and Iran. As such, we have increasingly observed the emergence of what is now referred to as the Splinternet and we can understand it as a synonym for what is called the multipolar world order. This concept also shows the bankruptcy of the idea that the internet would somehow contribute to free societies and decentralized power dissipation towards liberal democracy (End of History).
Today, this fragmented internet is rooted in the multipolar world order, with various Stacks corresponding to this balance of powers. We refer to this dynamic as the Battle of Stacks. The paradox described above lies at the core of the internet: The Battle of Stacks means all superpowers are developing their own technology Stacks and are attempting to elevate them to the global standard.
Over the past decade, awareness has grown that digital technology creates dependencies, which in turn create vulnerabilities. For instance, Europe is highly dependent on American cloud suppliers and hardware as well as on Chinese rare earth metals and affordable batteries. These technologies constitute the essential building blocks of a robust tech Stack, supporting the applications and functions that operate on top of it. Consequently, these dependencies allow superpowers to exert pressure, leading to significant dilemmas. Europe, historically a colonial superpower, has in many ways become the world's largest digital colony.
The United States, for example, can pressure Europe to adopt a certain stance on the Ukraine war, while China may expect the opposite and threaten to disrupt the European technology Stack. Another example: despite concerns about Meta and privacy and TikTok and potential espionage, Europe lacks viable homegrown alternatives to such social media platforms.
Ok, we do have some bargaining power and not merely because we are a big consumer market. However, although the EU plays a crucial role in some technology Stacks, like the semiconductor value chain with ASML, this is just one of many critical areas in the Battle of Stacks. Consequently, this limited influence reduces Europe's bargaining power.
Consequently, many EU governments and leaders are now stressing the importance of developing greater strategic autonomy. However, formulating a comprehensive strategy to achieve this goal remains a significant challenge, particularly given the seemingly insurmountable gaps in different sectors such as AI and the Cloud, and the declining influence of Europe as a regulatory superpower. More importantly, portraying the EU as a single digital empire is more aspirational than real. Draghi’s recent report on EU competitiveness illustrates this well, emphasizing the urgent need for a collaborative industrial policy and massive investment in digital technology—at a time when Europe's willingness to advance fiscal and monetary union remains distant.
As is clear by now, a freely accessible world wide web for the whole world does not exist. Different superpowers have their own Stack in which political and cultural ideas are expressed. For example, China has a highly centralized Stack in which the state is the dominant actor, while in the U.S., the free market rules the web just as it rules the economy. These ideas are visible in specific protocols and services, but also in the use of autonomous systems, the handling of data, and ideas about privacy. Let’s summarize the most important players in this battle.
China has built its digital Stack under clear state direction, with economic principles centered on self-reliance, strategic planning, and cyber sovereignty. Under President Xi Jinping, China has embraced the mantra of technological self-sufficiency (zili gengsheng), launching numerous government programs to achieve “self-reliance” in critical technologies such as software, semiconductors, operating systems, and robotics. This focus stems from a fundamental distrust of Western dependency. For example, the Made in China 2025 industrial plan explicitly stipulated that at least 70% of key components—including chips—would be made in China by 2025. While this ambition has not yet been fully realized, the trend continues for Beijing to invest massively in its own semiconductor supply chain to reduce import dependency. This quest for sovereignty is not merely economic, but also political-strategic: Xi’s ideology of cyber sovereignty entails that China claims the right to determine its own “path of cyber development and internet policy,” independent of Western norms. In practice, this means a state-protected and state-managed digital ecosystem – visible, for example, in the Great Firewall and laws that require data storage within national borders. Chinese policymakers position cyber sovereignty as an alternative model to what they see as American tech hegemony, and actively export this concept through initiatives such as the Digital Silk Road and partnerships with other countries
Another feature of China’s digital Stack is its emphasis on AI and hardware dominance as engines of economic growth and geopolitical influence. China launched a national AI development plan (2017) with the goal of becoming the world leader in AI by 2030. The country has already become the world leader in scientific AI publications and is now neck-and-neck with the US in advanced AI areas such as generative AI. This rapid rise is fueled by a national approach in which government, academia and industry work closely together – a “whole-of-nation” strategy. For example, the government has launched mega-projects to expand and organize AI computing infrastructure more efficiently, especially as US export controls restrict access to high-end chips. State-funded labs (such as the Peng Cheng Lab) and tech giants such as Alibaba and Baidu form China’s “national AI team,” which, with government support, is developing foundation models and other key technologies. In return, the Communist Party tightens the reins: these companies – the national champions – are expected to align with the state’s long-term priorities. For example, the government has acquired small stakes and board seats in tech companies to help shape their course, and has not hesitated to intervene in sectors that conflict with policy goals.
In the hardware sector, China is also flexing its economic muscle. The country has become the world’s largest exporter of high-tech goods, ranging from smartphones to telecom equipment. In 2021, China’s high-tech exports amounted to a whopping $942 billion – a record level that is roughly six times larger than that of the US in that year. Chinese manufacturing power is undeniable: more than a third of all tech products exported worldwide come from China. This hardware dominance is partly the result of decades of industrial policies aimed at building up production capacity and attracting Western electronics manufacturers to Chinese special economic zones. At the same time, Beijing realizes that dominance in basic hardware does not equate to control over critical chip technology. It is precisely in this area that China is trying to catch up through huge state funds (tens of billions of dollars) and acquisitions, but is hampered by Western sanctions and restrictions on access to the latest chip machines. Nevertheless, Beijing sees mastery of the semiconductor value chain as essential for both economic and military security. From this perspective, semiconductors and AI are “key and core technologies” that China wants to master at all costs.
All in all, China’s digital economy is characterized by strong centralization and government control. The state sets the framework and invests directly in priority sectors, while private innovation is stimulated but also guided. This combination of dirigiste planning and market growth has so far led to the rapid rise of Chinese tech giants and impressive innovations (such as advanced facial recognition, super apps like WeChat, and Huawei’s leading 5G infrastructure). At the same time, China uses regulation to ensure that digital technology is in line with party goals: for example, the Personal Information Protection Law (China’s GDPR equivalent since 2021) obliges companies to store data locally and subjects algorithms to state standards, including censorship and propaganda preferences. This unique combination of economic development with strict sovereignty and ideological control makes China’s digital Stack a model that deviates from Western open ecosystems. It is a model in which economic and national security coincide – an approach that the Chinese government is now actively promoting to other countries as an alternative digital governance model.
The US Stack has traditionally been characterised by market-driven dynamism and the leading role of Big Tech companies. Unlike China, the US has no central five-year plan for technology; innovation is largely left to private companies, startups and investors. This laissez-faire approach – fuelled by a culture of entrepreneurship and venture capital – has resulted in the rise of the world’s most valuable tech giants (Apple, Microsoft, Google, Amazon, Meta and others) and a constant stream of digital innovations from Silicon Valley. For a long time, the US government deliberately kept regulation to a minimum so as not to hinder business. For example, Washington chose to only lightly regulate artificial intelligence and internet platforms, believing that strict regulations create “barriers to innovation”. For example, the US currently lacks a national privacy law comparable to the EU’s GDPR; only a few states, such as California, have their own data protection laws, leaving data regulation at the federal level fragmented. This hands-off approach has given Big Tech unprecedented room to grow—and that has profoundly changed the economic landscape. Technology companies now dominate the stock market (more than 30% of the S&P 500 index), and six tech-focused industries have accounted for more than a third of U.S. economic growth over the past decade. In other words, digital technology isn’t just an industry in the U.S.; it’s the driving force behind much of its economic progress.
Big Tech’s influence extends beyond the stock market: these giants control entire value chains in the digital economy. For example, American companies dominate the cloud computing sector (Amazon’s AWS, Microsoft Azure and Google Cloud together hold most of the global market share) and they largely determine the course of AI development thanks to their vast R&D budgets and data sets. A handful of conglomerate-like companies thus control the infrastructure, platforms and application layer – from operating systems and app stores to social media and online advertising networks. Analysts point out that this concentration of power – “concentrated data, AI talent and digital infrastructure” – allows Big Tech to control entire innovation chains. This has led to criticism of their monopoly position, but from an economic perspective it has also given America a significant advantage: the world’s leading tech platforms are in American hands, and this ecosystem attracts talent and capital from all over the world. Silicon Valley acts as a magnet for top developers and entrepreneurs (thanks in part to relatively open immigration for highly educated talent), which perpetuates the virtuous cycle of innovation. Moreover, open-source initiatives are often driven from the US or supported by these large companies – think of Google’s contributions to open-source AI frameworks or Meta’s open AI models – which keeps the US influential in the community-driven layer of the digital Stack as well.
While the market-driven approach is central, geopolitical factors are playing a growing role in how the US protects and strengthens its digital economy. With the rise of China as a tech rival, the US government has begun to intervene in the “free” market more specifically to safeguard strategic interests. A turning point was the recent CHIPS and Science Act (2022), which allocated $52 billion to bring advanced semiconductor manufacturing back to US soil, reducing its reliance on Asian fabs. In addition, the Biden administration has imposed strict export restrictions on critical technology to China, particularly in the areas of semiconductors and AI hardware. In October 2022, Washington announced a comprehensive package of sanctions and export regulations to deny China access to advanced chip technology. For example, leading chip designers such as Nvidia and AMD are no longer allowed to sell their highest-end AI chips to Chinese customers. These measures mark a break with the past: the US government, which for decades has pursued a “primarily market-driven and laissez-faire” semiconductor policy, is now stepping in with unprecedented government intervention to maintain its technological lead. It is prepared to actively use “choke points” in the global chip supply chain – for example, America controls the market for chip design tools and state-of-the-art production equipment – to squeeze China’s tech industry in favor of its own industry
Geopolitics is also manifesting itself on other fronts: the US has effectively banned Chinese tech companies like Huawei and ZTE from its telecommunications infrastructure due to security concerns, and is exerting diplomatic pressure on allies (Europe, Asia) to do the same. At the same time, the US and EU are seeking rapprochement through initiatives like the Trade and Technology Council to develop joint standards and form a bloc against authoritarian models of technology use. Domestically, there is also a visible shift in the regulatory climate: both Democrats and Republicans have become more critical of Big Tech, leading to hearings on monopoly abuse and legislation (albeit slowly) on privacy and content moderation. Yet the core of the US digital economy remains market-driven – companies like Google and Apple remain the primary decision-makers on investments in, for example, AI, cloud and hardware. The government facilitates (through subsidies like the CHIPS Act, R&D funds via DARPA/NSF, etc.) and sets limits where necessary, but compared to China, the top-down input is relatively limited. This model has the advantage of maximizing the innovation capacity of the private sector, but the disadvantage is that societal effects are sometimes corrected only after the fact (e.g. monopolization, privacy issues). For economic trends in the US this means a continuous race driven by corporate innovation and competition, with recent geopolitical tensions leading to a nationalistic turn to secure crucial technological advantages.
Europe (and the European Union in particular) distinguishes itself by a digital Stack that is shaped by policy and regulation rather than by dominant indigenous tech companies. Where China focuses on state control and the US on unbridled market forces, Europe tries a third way: it uses regulation as an economic instrument to discipline the digital market and at the same time develop initiatives for technological sovereignty.
A first characteristic is that Europe strongly focuses on digital regulation and values. In recent years, the EU has profiled itself as a global “referee” of Big Tech by adopting extensive legislative packages. Think of the GDPR (General Data Protection Regulation) in 2018, which set the global standard for privacy protection and forced companies to handle personal data more transparently and securely. Similarly, the Digital Markets Act (DMA) and Digital Services Act (DSA) were passed in 2022, which respectively curb monopolistic practices of tech giants and require stricter responsibility for online platforms in terms of content and transparency. This wave of regulation is partly a response to Europe’s weaker competitive position: after all, the largest tech companies and platforms come from the US or China, not from Europe. By imposing rules on these foreign players – who want access to the European market of about 450 million affluent consumers – the EU is exerting economic influence without having comparable companies of its own. In other words, Europe is empowering the “rule-maker” instead of the “market-maker”. This is reflected throughout the value chain: from interoperability requirements (for example, the EU requires chat services to be able to communicate with each other) to strict antitrust actions (billion-dollar fines for Google, Meta and Apple for abuse of power). These regulations not only serve to protect consumers, but also create space for European alternatives and SMEs by changing the playing field.
At the same time, Europe is struggling with dependencies in the digital value chain that make it economically vulnerable. In the field of hardware and chips, for example, Europe has a relatively small share of global production. In the early 2020s, less than 10% of the world’s semiconductors were produced in Europe. This dependency became painfully clear during the 2021-2022 chip shortages that paralyzed European car manufacturers. In response, the European Commission launched the EU Chips Act – an ambitious plan to invest €43 billion in the European chip sector, with the aim of increasing the production share to 20% by 2030. The act, which will come into effect in September 2023, aims to increase Europe’s security of supply and attract high-end chip factories (e.g. from Intel or TSMC) to Europe. It is an example of how Europe has recently embraced industrial policy in strategic domains, a style more akin to that of the US and China. Furthermore, Europe is heavily dependent on foreign cloud and platform services: almost all leading cloud providers are American, and Chinese vendors are trying to gain market share in emerging EU markets. This has led to concerns about digital sovereignty – the idea that Europe should retain control over its data, infrastructure and technology, free from foreign intervention. Projects like Gaia-X embody this ambition: launched in 2020, Gaia-X is a European initiative to create a federated cloud and data ecosystem that follows EU standards, so that users retain control over their data and are not completely dependent on Big Tech cloud providers. It is essentially an attempt to build a European Stack in the cloud: not one giant European AWS, but a network of interoperable cloud providers that meet European standards and where data sovereignty is guaranteed.
Europe’s strategic initiatives for technological sovereignty go beyond chips and cloud. Investments are being made in pan-European AI research (e.g. through the Horizon Europe programme and partnerships between top universities and companies) with a focus on ethical AI that is in line with European values. The EU wants to set standards here, just as it did with privacy. Furthermore, countries like France and Germany are encouraging open-source solutions in the public sector (Open Source Program Offices) to reduce their reliance on proprietary software. An EU study estimated that open-source software contributes between €65 and €95 billion to European GDP annually. There is a growing awareness that investing in shared digital commons – such as open data, open standards and open-source software – is not just a value choice, but also delivers economic returns and can break market concentration by large non-EU players. Politically, the EU emphasizes its “strategic autonomy” in digital technology: this is reflected in policy documents and speeches by leaders advocating less dependence on American and Chinese technology, without giving up the open economy. For example, Ursula von der Leyen (EC President) said that Europe must go its “own way” in the digital transition, and under her leadership the Global Gateway was launched – a European counterpart to China’s Digital Silk Road, aimed at investing in digital infrastructure in developing countries with European standards.
In short, Europe’s digital Stack is characterized by a high level of regulation, cooperation and normative leadership, but also by the absence of large home-based players in sectors such as social media, search or e-commerce. Economically, the EU has focused on taming big tech through regulation and cultivating its own ecosystem through targeted investments and projects. Whether this strategy will bear fruit remains an open question: on the one hand, Europe has been successful in influencing global business practices (many multinationals now make GDPR compliance standard, for example), on the other hand, it has not yet succeeded in creating a European equivalent of Google or Alibaba. In the coming years, the effectiveness of the Chips Act and initiatives such as Gaia-X will be an important benchmark. If Europe succeeds, it can build a more robust Stack of its own; if not, it will continue to rely mainly on “in-house” and regulating external technology within its markets.
In addition to national and regional Stacks, there is an emerging decentralized digital Stack, which is not tied to a single country but is based on blockchain networks, open-source communities, and distributed technologies. While other Stacks are largely dominated by states or large corporations, the decentralized Stack is characterized by the distribution of control across many participants worldwide. Economically, this Stack embodies a new approach: it creates digital value chains and services (such as financial services, data storage, identities) without traditional intermediaries or monopolistic owners.
Central components of the decentralized Stack are blockchains and cryptocurrencies, which form a global, crypto-secured transaction network. This sector has grown explosively over the past decade. The total market value of cryptocurrencies peaked at around $3.7 trillion at the end of 2024 – a staggering growth for an asset class that was virtually non-existent a decade earlier. An entire ecosystem of financial services has emerged on these blockchain platforms, known as decentralized finance (DeFi). Smart contracts on platforms like Ethereum allow users to save, borrow, trade, and insure without the need for banks or insurers. In 2021-2022, the total value locked in DeFi protocols exceeded $100 billion, illustrating how serious this “alternative financial system” has become. The economic priorities here differ from traditional finance: DeFi strives for open access (anyone with internet can participate), transparency (all transactions are visible on the blockchain), and programmability of money (financial instruments can be created by anyone with code). This has created new forms of returns (e.g. yield farming, staking) and new risks (hacks, volatility) – inherent to a developing sector without a central regulator.
A second pillar of the decentralized Stack is open-source technology and community-driven innovation. The majority of blockchain software and crypto projects are open-source: the source code is freely available and programmers around the world jointly develop the protocols. This open approach accelerates innovation and ensures interoperability between projects (e.g. many DeFi apps can work together seamlessly because they are built on the same open standards). In fact, open source is the silent backbone of the entire digital economy – a recent Harvard study estimated that companies worldwide would have to spend $8.8 trillion to reverse engineer all the open source software they run on, and approximately 96% of all commercial software contains open source components. In the decentralized Stack, this is even more pronounced: open source is the norm and part of the ethos (“code is law”). Economically, this offers great savings and rapid progress, but it also raises the question of how to sustainably finance critical open infrastructure for the community. To date, a major mechanism for this has been tokenization: many blockchain projects create their own crypto tokens that gain value as the network grows, rewarding early contributors and incentivizing further development. This has resulted in fledgling new organizational models such as DAOs (decentralized autonomous organizations) where token holders collectively decide on financial and protocol issues. In this way, the decentralized Stack attempts to reconcile economic incentives with open participation.
Priorities within the decentralized Stack revolve heavily around giving control back to users and creating trustless systems (where parties don’t have to trust each other personally, but instead rely on the technology). This approach seeks to counter monopolization by large corporations and resist censorship by states. For example, where traditional finance relies on central banks and government guarantees, DeFi builds on mathematical certainty and distributed risk. Where social media is now concentrated in a few companies, developers are working on decentralized social network protocols where no single company owns all the data. This doesn’t mean that the decentralized Stack is completely disconnected from existing economies – on the contrary, they interact. For example, we see large corporations and governments embracing blockchain technology for their own use (albeit often in a more permissioned form). Central banks are experimenting with blockchain-based digital currencies (CBDCs), and traditional financial institutions are investing in crypto startups or offering crypto services, suggesting a gradual integration. At the same time, regulators are increasingly stepping in: as crypto and DeFi grow, governments are creating regulations to protect consumers and combat illegal practices. For example, China has largely banned private crypto use to maintain capital controls, while the EU recently adopted the MiCA regulation to place crypto assets in a legal framework. These developments highlight a tension: the decentralized Stack is partly operating outside existing structures to promote innovation and inclusion, but in doing so is bumping up against the edges of legal-economic systems governed by states.
Economically, the decentralized Stack is a source of new value creation and more efficient processes, but also a domain of high risk and volatility. Crypto markets experience cycles of booms and busts that create and evaporate billions in virtual assets. Nevertheless, investors and innovators worldwide continue to have faith in its potential: in 2021, a record amount of venture capital flowed into blockchain startups, in anticipation that Web3 applications (the next generation internet based on decentralization) will provide new platform models and revenue streams. In summary, the decentralized Stack is a kind of parallel digital economy that is experiencing rapid growth and experimentation, driven by principles of decentralization, community and open innovation. Its future role will depend on the extent to which these technologies can become mainstream and find a connection with, or acceptance by, the more centralized world of states and large corporations.
When we compare the digital Stacks of China, the US, Europe and the decentralised world, sharp contrasts and interconnections become apparent. A first important dimension is the degree of centralisation versus decentralisation in management and ownership. China represents the extreme end point of centralisation: the state has an all-determining role here and even the largest “private” companies operate in the shadow of the party leadership. Innovation follows the course of national plans and cyberspace is locked within borders (cyber sovereignty). At the other end of the spectrum is the decentralised Stack, where ownership and governance are spread across countless anonymous participants and there is no central authority to provide direction – innovation emerges organically from the community and protocols evolve via consensus mechanisms. The United States takes an intermediate position: management does not lie with the government, but there is de facto centralisation because a few mega-companies have a disproportionate share in the digital ecosystem (Big Tech as the de facto central actors). Europe is also in the middle, but in a different way: here, there is no central business bloc and a strong central state in the technological field (the EU coordinates policy, but does not have the coercive power of a national government), which means that the digital economy is more fragmented across small and medium-sized businesses and foreign providers. However, Europe is trying to achieve a form of central coordination at continental level through joint rules and standards.
A second comparison runs along the axis of regulation and control. China and Europe are both strongly rule-driven, but with a different purpose and nature. China's regulations are often interventionist and substantively directive (e.g. obligation for algorithms to spread "positive energy" in accordance with party doctrine), aimed at strengthening state control and social order. Europe's regulation, on the other hand, is protective and market-correcting in nature, aimed at safeguarding individual rights (privacy, competition) and European public values in the digital sphere. In both cases, we see regulation as a tool to claim sovereignty: China claims state sovereignty over digital space, Europe claims citizen sovereignty and its own legal order over Big Tech. The US has historically taken a light regulatory approach – with the result that many issues (such as data abuse, monopoly formation) have been left to the market or through retroactive intervention. Only recently, driven by geopolitics and domestic pressure, have we seen the US impose more direct rules and interventions (e.g. the aforementioned export controls, or discussions about Section 230 adjustment for social media). The decentralized Stack essentially evades traditional regulation: the self-executing nature of smart contracts means that “code is law” within the network. However, rules also come into play here as soon as decentralized services interact with the real world – for example, several countries require KYC/AML compliance on crypto trading platforms. Interestingly, concepts from the decentralized world, such as community governance, are being pushed through to traditional policy domains: consideration is being given to whether decentralized features (transparency, onchain verifiability) can be used in government policy and business operations.
A third axis of comparison concerns innovation approaches and financing. In China, innovation is a national project: top-down megaprojects, government subsidies and long-term visions (e.g. rolling out 5G infrastructure or AI research clusters) keep the pace high. But this approach can also lead to inefficiencies or bubbles if resources are misallocated – the challenge for China remains to “reconcile” state control and spontaneous market innovation without waste. In the US, innovation is largely a market-driven competition: start-ups compete for venture capital, and success is measured by market adoption and profits. This has created a very dynamic ecosystem in which breakthrough innovations emerge, but also a focus on short-term commercial viability (sometimes at the expense of basic research, which in turn has to be funded by government and universities). Europe’s innovation model emphasizes collaboration and public-private partnerships: projects often receive EU subsidies if consortia of companies and knowledge institutions collaborate across national borders. This model promotes knowledge sharing and prevents duplication, but sometimes leads to slower decision-making and less radical, risky innovations compared to Silicon Valley’s “move fast and break things” mentality. The decentralized Stack innovates via an open commons model: ideas are shared, forked, improved by communities worldwide. This results in rapid, parallel experiments (think of hundreds of blockchain projects simultaneously trying out different design choices), but can also cause fragmentation and a lack of clear direction. The funding mechanisms thus vary from state budget (China), private capital (US), mixed public funds (EU) to crypto tokens and community crowdfunding (decentralized Stack). Each model has implications for what kind of innovations are pursued – in China and EU it is possibly more aligned with political/societal goals (respectively national pride/control and societal values), in the US and decentralized world it may be more driven by profit or community benefit.
Interesting are the interconnections and interactions between these Stacks. After all, digitalization is globally intertwined: no power bloc stands completely alone. For example, there is both competition and mutual dependency between the US and China stacks. America’s tech giants have long benefited from cheap Chinese production and huge Chinese consumer markets, while Chinese companies have been dependent on Western semiconductor technology and know-how. The recent trend of technological decoupling is putting this relationship under pressure: the US is trying to make its supply chain less China-bound, and China is launching initiatives to be less US-bound through its own standards and investments in the South. Europe finds itself in a delicate position in this power struggle – it shares democratic values with the US and relies on American companies for many digital services, but it also does not want to be a mere follower and seeks strategic autonomy that sometimes overlaps with Chinese views (for example, the idea of data sovereignty). This creates room for cooperation between Europe and like-minded countries to develop alternatives (such as jointly investing in chip capacity or jointly setting AI ethics standards), but also for tensions, for example if American cloud companies clash with European privacy rules or if Chinese investments in European telecom infrastructure are scrutinized.
Finally, the decentralized Stack is both a challenger and an enabler for traditional power blocs. On the one hand, it undermines their control – Bitcoin can facilitate capital flight from a country despite currency controls, and Big Tech’s platform power can be tempered as users migrate to open, peer-to-peer alternatives. On the other hand, states and corporations can also use this technology to their advantage: central banks are exploring blockchain for more efficient transaction settlement, and corporations are using tokenization to create new markets. We are also seeing convergence: Big Tech is investing in Web3 startups, Chinese cities are experimenting with local blockchain-based currencies, European institutions are funding decentralized identity pilots. This illustrates that the boundaries are not hermetic – the Stacks are influencing each other. For example, the decentralized community’s emphasis on privacy and encryption has tightened policies around data protection in Europe; Conversely, strict regulation (China’s crypto ban, US SEC action) influences where and how decentralized innovations proceed (often moving to jurisdictions with milder regimes).
This comparison shows that power in the digital world takes multiple forms: the centralized power of states (China), the market and infrastructure power of multinationals (US), the normative and regulatory power of policy institutions (EU), and the protocol power of decentralized networks (blockchain). Each power bloc tries to maximize its strengths and mitigate its weaknesses. China is building full vertical integration of its Stack to reduce external dependencies; the US is now investing in supply chains and regulation to secure its lead; Europe is trying to exert control through coalitions and rules in a domain where it has less market weight; and the decentralized world continues to innovate to remain independent of traditional powers, while also trying to gain legitimacy in their eyes.
The economic future of the digital power blocs will be determined by how these different Stacks develop and to what extent they converge or diverge. We are already seeing signs of a more fragmented digital world order, in which an American-oriented ecosystem, a Chinese ecosystem and a European regulated domain coexist side by side – with emerging decentralized networks that know no national borders in the background. Each model has its advantages: China’s state-led approach can accelerate large-scale implementation of new technology (e.g. rapid rollout of 5G, AI surveillance on a national scale), the US’s market model remains a powerful flywheel for disruptive innovations and entrepreneurship, and Europe’s regulatory model offers a route to align technological progress more closely with public interests and rights. The decentralized Stack thereby functions as a laboratory for radical innovations that can surprise the established order and sometimes force it to adapt (such as central banks reacting to the rise of cryptocurrencies). At the same time, there are significant challenges and dependencies. No power bloc can operate completely autarkically in the digital sphere: China remains dependent on a few Western and Japanese suppliers for semiconductor equipment, US companies want access to global markets and talent (including from China and Europe), and Europe will continue to depend on imports of critical technology and expertise for years to come. Even the decentralized community relies on physical infrastructure (data centers, submarine cables) that is in the hands of traditional actors and is sensitive to government policies (such as the legal status of crypto assets). This realization is permeating policy: initiatives for resilience and diversification are emerging (such as the US-Japan-EU collaboration to make the semiconductor supply chain more robust, or India’s emergence as an alternative supplier to both the US and China). In addition, there is a shared interest in certain global challenges – cybersecurity, climate impact of digital infrastructure, standardization of e.g. 6G – that require cooperation between power blocs despite system differences.
For the general public and companies, this means that the “rules of the game” in the digital economy can differ by region. Companies must navigate between, for example, strict privacy regulations in Europe, content restrictions in China and antitrust developments in the US. At the same time, opportunities arise: European AI startups can benefit from a market environment with ethical labels, US cloud providers respond to sovereignty demands by opening local data centers, and decentralized applications find niches where they offer unique value (for example, in countries with unstable currencies, crypto is attractive). In short, the economic trends in the digital Stacks of China, the US, Europe and the decentralized networks show a world in transformation. We are moving towards a multipolar digital economy in which different models of technological development and governance compete but also coexist. In the coming years, the balance between these models will largely determine what the global digital economy will look like: whether further fragmentation occurs with incompatible systems, or whether hybrid forms and shared standards emerge. One thing is certain: digital technology remains a core engine of economic growth and geopolitical power, and each power bloc will strategically use its Stack to strengthen its position. Understanding these dynamics is essential – it helps policymakers, entrepreneurs and citizens adapt in an era where control over the digital stack has become synonymous with economic sovereignty and future well-being.
Read part 2 here.
