Over the years following the birth of the iPhone in 2007, the EU has become a digital laggard. The tech giants dominating the European digital economy in 2018 hail from the US, and their main competitors are Chinese, not European companies. How can the EU keep its competitive advantage in such a changing environment? Paul-Jasper Dittrich and Jan Krewer explain two fundamental measures to ensure Europe’s competitiveness in the face of the digital revolution. This paper is a cooperation between the Jacques Delors Institutes in Paris and Berlin as a contribution to the 2018 Franco-German Rencontres d’Evian.