> The EU is also not interested in strengthening the domestic software market by engaging in selective protectionism like the Chinese, because of the extensive lobbying by foreign and domestic actors which are the incumbents and see no interest in a competitive and dynamic environment which would destroy them.

They don't need to though, just require all government software to be released under a free software license, with limited exceptions for national security. The US does very well in software, so the EU should commoditise their complement and focus on free software services. This is both cheaper than the current services, and produces lots of employment for EU based tech people (probably at less money though, unfortunately).

This is basically what China is doing with their open weights models.