Future-proofing the EU: ordoliberal governance and algorithmic regulation

Abstract The European Union (EU) faces unprecedented challenges from the rapid development of Artificial Intelligence (AI), ranging from a lack of domestic AI capabilities to the dominance of a few large global tech companies and a significant legitimacy gap in technology regulation. This paper critiques the EU’s current top-down governance model and highlights the need for a more dynamic and adaptive approach to digital policy. Drawing on ordoliberal principles, it argues for the evolution of these principles into a modern ‘contemporary ordoliberalism’ that can better respond to the demands of digital governance. In particular, the paper proposes six key principles: embracing AI applications, fostering networked governance, improving interdepartmental collaboration, promoting algorithmic transparency, supporting decentralising technologies, and adopting iterative regulatory approaches. For each principle, the paper derives concrete economic and legal measures that the European Commission can adopt in its forthcoming reform programmes, ranging from open source initiatives and updated European Citizens’ Forums to the promotion of local tech ecosystems and the creation of more regulatory sandboxes. Overall, by embedding an updated ordoliberal framework, the EU can develop a future-proof digital governance model that promotes competition, social resilience, and democratic values.