Robert Philipps Building a Strong Digital Economy: A field of action for European social democracy Digitalisation means a fundamental transformation for the economy: products, processes and business models are changing, sometimes radically. Many things are becoming more efficient and completely new products and business mo­dels are being created. It is precisely these new digital business models that have seen global success in recent years. For exam­ple, the invention of platform business models has revolutioni­sed entire industries- like retail- or given rise to new ones such as social networks, app economy, online advertising, or cloud computing. The new business models are so revolutiona­rily successful that today's global economy is clearly dominated by the leading companies in this field. Despite all the known downsides of their business models, these companies are re­sponsible for an ever greater share of the value creation. While some companies are profiting from the process of digitalisation, others whose business model has become obso­lete or which have not withstood the competitive pressure, are disappearing. This inexorable structural change is also re­distributing wealth between regions and nations. The win­ners of digitalisation are the regions and countries where companies emerge or invest that know how to exploit these huge new markets- and these are primarily companies in the digital economy. As early as 2011 the Wall Street Journal had been running the headline"Software is Eating the World". This is the main reason, besides of the idea of preserving au­tonomy("technological sovereignty"), why governments around the world are trying to support domestic economies in the digital transformation process. They engage in indust­rial, technology, innovation and location policies, trying to promote key technologies and to build an internationally competitive tech sector. In the hardware and software sector, Europe is far behind the international competition. Future technologies such as cloud computing, IoT, 6G, digital platforms, blockchain, quantum computing or artificial intelligence have disruptive potential for large parts of the"old economy" and are domina­ted by US or Chinese companies. Even in Germany, still the economic engine of Europe, the situation is hardly better. Alt­hough there are positive individual examples(such as Siemens, Bosch or SAP), overall it shows"considerable weaknesses in the development of digital technologies", according to a report by the German“Expert Commission on Research and Innova­tion”(EFI) 2022. Germany is not only losing touch in a techno­logy area that is becoming increasingly important economical­ly, but is also endangering its existing strengths in production technologies as well as in the bio- and life sciences, as these are increasingly being penetrated by digital technologies, the re­port continues. The consequences of this technological weak­ness are already evident today: among the 100 most valuable companies in the world there are only 15 European companies, including only one German one(Siemens). Not a single Euro­pean company is to be found among the top 10. 1 Fig. 1 If only we could turn back time Top 100 companies by market capitalisation World,% of total 100 90 80 70 60 50 40 30 20 10 0 2000 2005 2010 2015 2021 Rest of world Asia-Pacific (excluding China) China Europe United States Source: Bloomberg; The Economist 2021 Building a Strong Digital Economy— FES impuls 1