The internationalisation of information and communication technologies has accelerated since the 1990s in Europe and worldwide. Taking a close look at the empirical analysis of competitive trade positions, trends in foreign direct investment and the internationalisation of research and development in ICT brings many new insights about the expansion, innovation and adjustment in the EUs most dynamic sector. Moreover, the analysis discusses case studies on key players in ICT and suggests major policy conclusions for a field considered fundamental in the context of the EUs Lisbon Agenda. The theoretical and empirical analysis gives a new and differentiated picture of European ICT where the links between telecommunications dynamics, software innovation and digital services are crucial. Outsourcing, insourcing and offshoring are natural elements of a new digital international division of labour which require reforms in both the EU member countries and at the supranational level.