Battle for the Future of the Net

The Semantic Web connects information in novel ways. Will EU tech companies drop the ball on another breakthrough?

by Jennifer L. Schenker

Europe's technology landscape is littered with stories about what might have been. Take the case of Finnish engineer Olli Martikainen who started developing a router—network hardware that directs streams of data from one computer to another—back in 1982 at VTT, a research institute in Espoo, Finland. The Finnish companies financing the project, including Nokia (NOK), didn't see the potential, so the project was dropped in 1986, shortly before a U.S. startup called Cisco Systems (CSCO) went on to staggering success commercializing similar technology. Martikainen's prototype now gathers dust in a university display.

MP3 music compression was invented nearly 20 years ago at Germany's Fraunhofer research institute, but it was brought to market by U.S. companies. And the father of the Web, British scientist Tim Berners-Lee, created the technology in a Swiss lab only to see U.S. companies such as eBay (EBAY), Amazon (AMZN), Yahoo! (YHOO), and Google (GOOG) cash in on the idea.

High Stakes

Now, as the next generation of Internet technology edges toward the market, European companies and policymakers are determined not to suffer the same fate. In a bid to get ahead of U.S. researchers, they are underwriting research into the so-called Semantic Web—also sometimes called Web 3.0—to the tune of hundreds of millions of euros. "The U.S. and Europe are competing on funding something that could have an extraordinary strategic impact," says Whit Andrews, a research vice-president at technology consultancy Gartner (IT).

At stake is nothing less than the future of the Net. Developed in part by Berners-Lee, who is now based at MIT, the Semantic Web goes well beyond today's relatively static information highway to add richer media and support for vast pools of unstructured data—in effect, making all the world's knowledge available online. It also connects the information in ways that will let users discover novel associations among unrelated data. That has big implications for fields ranging from the military to medical research to business intelligence (see BusinessWeek.com, 4/9/07, "Taming the World Wide Web").

European engineers, working with researchers from the U.S. and elsewhere, already have played a big role in the development of basic Web 3.0 standards. Now, governments are raising the stakes to keep Europe at the forefront. "They want to create the defining technologies for the Semantic Web and give European companies an advantage in the market," says Mark Greaves, a scientist with Seattle's Vulcan, the asset management company started by Microsoft (MSFT) co-founder Paul Allen. "If you are looking to fund revolutionary technology with commercial importance then you have to put your money where your mouth is," says Greaves, who heads Vulcan's Semantic Web research program.

Can Europe Step Up?

The concern is whether Europe's traditional top-down approach will stimulate—or smother—creativity and innovation. After all, while Europe has plodded along in recent