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
Over the past two years, we have systematically tracked the growing political effort to build “Sovereign AI” in Europe. A key theme throughout this work has been that Europe’s AI industrial policy rests on an implicit, largely unexamined assumption: that European AI companies, their funders, and their market incentives are naturally aligned with European strategic interests. Simply put, the more European AI companies there are, the better for Europe.
The reality is much messier. What looks like a European AI ecosystem is a confluence of interests pulling in different directions: VC timelines that reward fast exits over long-term independence, market structures that funnel revenue upstream to US providers, infrastructure dependencies that deepen with every investment, and playbooks borrowed wholesale from Silicon Valley.
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This mini-series consists of three parts: The first piece will examine Europe’s AI application layer; how startups like Lovable function as a distribution channel for US models, and what that means for the value Europe actually captures. The second will trace why even Europe’s strongest independent AI companies, like DeepL, end up dependent on US hyperscaler infrastructure. The third will pull the threads together: the common structural dynamic, the strategic choices Europe is avoiding, and the honest uncertainties about where AI is heading. These pieces will be published over the coming weeks in Tech Policy Press and on the EU AI Industrial Policy Monitor Newsletter.
Read the series here.