REUTERS,
London
No one in Brussels should be under any illusions about Europe’s standing in the global AI race. It’s plain to see that the bloc lags the United States and China on almost every conceivable metric. A 1 billion euro ($1.16 billion) investment pledge unveiled by the European Commission on Wednesday will do little to change any of that. Yet there are, at least, some seeds of a viable plan.
Only a handful of European companies are relevant in the global AI industry. Dutch $400 billion group ASML, for example, makes machines that can print circuits on chips, and recently invested in French large language model developer Mistral at a $14 billion valuation. Germany’s $320 billion SAP meanwhile, helps businesses navigative the bold new world of AI agents. Beyond that, it’s thin. There’s no European leading-edge chip designer like Nvidia, and it’s not clear how the bloc could create one. Compare that with China, where Huawei, Alibaba and others are making strides with AI-grade silicon.
Europe is also heavily dependent on the US for cloud computing services, which is how many companies end up interacting with the latest models. Microsoft’s Azure, Amazon.com’s AWS and Alphabet’s Google Cloud control around 70 percent of the European market, with just 15 percent held by local players, Synergy Research Group data shows. Private investment in European AI startups, meanwhile, is slow, and the gap with the US is only widening given a recent fundraising and investment blitz by OpenAI.
The question is what Brussels can do about all this. One move, announced on Wednesday, is to shove 1 billion euros of funding towards boosting AI adoption. Commission President Ursula von der Leyen name-checked the robotics, healthcare, energy and automotive sectors in a statement.
While the money is tiny by American standards, it’s broadly the right idea. Major European economies including Germany and France have large industrial companies, like carmakers and utilities, while governments are also trying to build up local defence manufacturing. If the bloc isn’t globally relevant in building the smartest models or services, perhaps it can lead in the industrial applications. The partnership between ASML and Mistral, focused on developing specific uses of AI in semiconductor manufacturing, is a case in point.
Another logical place to focus on is talent. With the United States mulling policies that could make life tougher for foreign workers, Europe might have an edge.
A huge hurdle to clear, however, is the cost of energy, which is a non-negotiable input when building and using AI. European electricity prices can be more than twice as high as in the US and China, according to Mario Draghi’s 2024 competitiveness report. The former Italian prime minister floated a range of possible fixes, including green energy investments.
One sign of progress is that the Commission seems alert to the dangers of burdensome AI regulation, and is seeking to make life easier for startups. While Europe is behind, it at least has the building blocks of a sensible approach.
The European Commission on October 8 announced a 1 billion euro ($1.1 billion) plan to ramp up the use of artificial intelligence in key industries amid a push to cut the European Union’s reliance on US and Chinese technologies.