This three-part series is published in partnership with the AI Now Institute.
Frederike Kaltheuner advises governments, funders, and institutions on AI industrial policy, sovereignty, and competition. She is also an advisor at the AI Now Institute. Previously, she was the founding Director of the European AI and Society Fund, Special Adviser to the Vice-President of the European Commission, and the founding Director of the Technology and Rights Division at Human Rights Watch.
Leevi Saari is a PhD Candidate at the University of Amsterdam and an EU Policy Fellow at AI Now Institute, researching the political economy of AI governance
We have argued that Europe’s AI ecosystem is subject to the gravitational pull of dominant US players. Even where European AI companies succeed, value tends to flow upstream to US AI labs and, ultimately, hyperscalers — firms that are simultaneously Europe’s indispensable infrastructure providers and its competitors.
We also showed how the response from Brussels has been to reach for the tools of the market: boosting supply by co-financing gigafactories or funding consortia to build models, channeling institutional savings into VC and growth equity, paired with deregulation and looser labor restrictions. The hope is that European AI companies, especially in health, manufacturing, defense, or legal, can replicate Silicon Valley’s flywheel dynamic, in which successful startups produce exits, exits recycle capital and experienced operators back into the ecosystem, and the ecosystem produces more startups.
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To manage expectations: we do not have a silver bullet — a lucid, innovative policy option that solves these problems in one fell swoop without causing pain in the European tech environment. We wish we did. But in contrast to the policy scripts that deepen Europe’s dependence, we have four that encourage a different way of thinking:
1) Take the market’s uncertainty seriously
2) Actively shape the market to be more open, more competitive, and more interoperable
3) Treat cloud dependence and AI sovereignty as the same problem
4) Decide what AI is actually for
Read the article here.
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