Global competition in artificial intelligence (AI) is escalating rapidly. While the United States relies on open innovation led by Silicon Valley, where major companies focus on development through extensive investments and deepening partnerships, China adopts an adaptive innovation approach, striving to provide competitive models despite American sanctions, benefiting from improving existing technologies and developing local alternatives. Amidst this backdrop, the European Union seeks to craft a balanced model that combines innovation with legal regulation to enhance the digital sovereignty of the old continent; this was highlighted during the Global AI Summit in France in February 2025. However, Europe’s role faces several challenges that may affect its ability to shape its vision in a rapidly transforming technological environment.

European Ambitions:

Europe’s role in artificial intelligence reflects a strategic direction that goes beyond mere regulatory responses to technological developments; it encompasses deeper dimensions related to reshaping technological power balances, which can be outlined as follows:

Balancing US-China Competition: Brussels aims not only to compete with Washington and Beijing in AI but also to present a model focused on ethical responsibility and the protection of fundamental values such as privacy and transparency. This is evident in European companies like Aleph Alpha from Germany and Mistral AI from France, which are developing AI models that emphasize interpretability and technical independence. Founded in 2019 in Heidelberg, Aleph Alpha works on generative models that comply with European data protection regulations. Mistral, established in April 2023 in France, focuses on developing open-source language models like the Le Chat assistant, striving to be a European alternative to ChatGPT. While these companies may not directly compete with American and Chinese models, they represent a European approach centered on digital sustainability, balancing innovation and regulation according to European values.

Enhancing European Digital Sovereignty: EU leaders recognize that over-reliance on American and Chinese technology threatens their digital decision-making independence. This has prompted the European bloc to adopt policies aimed at developing its own capabilities in AI, aspiring to make Europe the continent of artificial intelligence. The EU seeks to reduce dependency on tech giants by supporting research and development and empowering local companies to build technology solutions that align with European standards. In this context, the concept of “European centrality” is crucial; it extends beyond achieving digital self-sufficiency to establishing the EU as a major player in the AI industry, especially in light of the US-China competition for technological dominance, rather than remaining a mere consumer market for foreign technology.

Influencing Global Standards: The EU aims to shape the global legal and regulatory framework for AI to ensure technology aligns with its values. The AI Act, which came into effect on August 1, 2024, is a significant example of this trend as it seeks to establish binding standards that extend beyond the EU itself; this reflects Brussels’ desire to be a rule-maker rather than merely a rule-taker. By imposing its standards on global companies wishing to enter the European market, it attempts to reshape the technological playing field, making the responsibility for developing AI a fundamental part of the global technological landscape.

Interconnected Challenges:

Europe’s role in AI faces a range of intertwined structural challenges that extend beyond mere technological competition:

Infrastructure and Funding: Digital infrastructure is a crucial factor in enhancing AI competitiveness, prompting countries and major companies to invest heavily in this area. Despite European efforts, significant gaps remain compared to the United States and China, both in terms of funding and technical capabilities.

In early 2025, Canadian investment firm Brookfield allocated €20 billion for infrastructure development in France, including €15 billion for data centers and €5 billion for data transmission and renewable energy production. Saudi Arabia invested €10 billion in a data center in Italy, and the UAE injected €50 billion into a data center in France.

In contrast, in 2023, private investment in the EU totaled only €7.3 billion—a negligible amount compared to the €67.2 billion invested by the United States in the same year. Estimates from McKinsey indicate that European companies lag behind their American counterparts in AI adoption, despite a projected €500 billion investment needed to enhance AI infrastructure.

To bridge this gap, the European Commission allocated €200 billion to support technological innovation, while French President Emmanuel Macron announced a €109 billion investment plan during the 2025 Paris AI Summit. This initiative aims to strengthen France’s capabilities by leveraging advanced education, nuclear energy, and the single European market.

By 2025, companies such as Meta, Microsoft, and Alphabet are expected to invest €230 billion in expanding data centers and acquiring advanced processors. For instance, Meta announced plans to increase its data center capacity by over 2 gigawatts and boost the number of graphics processors in use to 1.3 million units—highlighting the growing demand for high-performance computing.

In China, companies like Alibaba, Tencent, and Baidu invested 50 billion yuan (approximately €7 billion) in the first half of 2024, up from 23 billion yuan during the same period in 2023. These investments are aimed at reducing dependency on Western technologies and reinforcing China’s leadership in AI.

Data Centers and Digital Competitiveness: The French Montaigne Institute points to a worrying situation for Europe in this area, highlighting that only 18% of the world’s data centers are located in Europe, with less than 5% of these centers owned by companies from the continent; this means that most European data—crucial for AI—is stored and processed outside Europe, threatening the continent’s digital sovereignty. In June 2024, French company Mistral warned that this lack of computing power available on European soil poses a significant challenge to its growth. Looking at the absolute numbers of data centers around the world (regardless of ownership), the United States leads with 5,381 centers, followed by Germany (521), the United Kingdom (514), China (449), and both France and the Netherlands (315 each). These figures reflect a clear gap in digital capabilities between countries and also confirm that simply having data centers in Europe does not necessarily mean they serve European interests fully.

To address the challenges of the AI race, the European Union has not only launched initiatives like OpenEuroLLM and “EU AI Champions,” aimed at raising €150 billion in collaboration with major companies like Airbus, ASML, Deutsche Bank, Siemens, and Mistral, but has also taken practical steps to enhance its infrastructure. The obstacles extend beyond funding and resource ownership to include limited energy and expansion challenges, which restrict Europe’s ability to meet growing demand; therefore, merely increasing the number of centers is insufficient; a smart and flexible infrastructure owned by Europeans must be developed to build an integrated and sustainable system that guarantees Europe sovereignty over its data and technologies.

As part of its strategy to enhance Europe’s leadership, the European High-Performance Computing Joint Undertaking (EuroHPC JU) launched a project in December 2024 to establish a network of “AI factories” across the continent. This initiative, backed by national and European investments, aims to provide advanced infrastructure to support startups, SMEs, and researchers in developing and training AI models and applications. By 2025, the number of these factories is expected to reach 13, distributed across EU member states. The sites were selected in two phases: the first on December 10, 2024, included 7 factories in Finland, Germany, Greece, Italy, Luxembourg, Spain, and Sweden; the second on March 12, 2025, added 6 factories in Austria, Bulgaria, France, Germany, Poland, and Slovenia. This initiative invested approximately €485 million, representing essential support for the EU’s AI leadership goals.

Geopolitical Shifts and Restructuring European Policies: With Donald Trump’s return to power, the EU faces several challenges, the most significant being protectionist trade policies that could impact supply chains and technological industries, alongside the possibility of reduced US military support, which may prompt Brussels to redirect resources towards security and defense at the expense of other areas. In this context, the “Rearming Europe” plan, with a budget of €800 billion, aims to enhance defense capabilities, but its funding may require tax increases or restructuring of expenditure, potentially impacting citizens’ purchasing power and social services. As inflation and recession persist, concerns have been raised about the repercussions of this policy, especially following protests that emerged in Italy in mid-March 2025.

Additionally, the rise of far-right parties may complicate the unification of defense and technology policies within the union. The decline in transatlantic cooperation is likely to affect scientific research and European competitiveness; this necessitates a delicate balance for decision-makers between security and economic stability amid a changing political landscape.

Attracting Technical Talent: Brussels faces challenges in attracting technical talent, as the US draws many European experts thanks to its research environment and tech hubs. While Europe produces around 25% of the world’s published scientific research, its population constitutes only 5.6% of the global total. Although Europe relies on importing talent, Germany successfully attracts some, while France struggles to retain it; this reflects disparities in European countries’ abilities to attract talent. Even though the European labor market features a high percentage of holders of advanced degrees (over 70% of those working in AI hold Master’s or PhDs), this academic advantage may not be the sole determinant of competitiveness.

Increasing Energy Demands and Environmental Impacts: The AI sector in the EU faces a growing challenge in securing its energy needs, as global energy consumption reached 620 exajoules in 2023, with data centers’ electricity consumption rising to 4.5 gigawatts, accounting for 8% of total consumption. Despite a 50% increase in renewable energy production due to the energy crisis resulting from the Russia-Ukraine war, production fluctuations affect supply stability; this was evident in January 2025 when wind energy generation in Germany declined, leading to increased reliance on fossil fuels and a 15% rise in gas prices. Data centers also pose environmental challenges, as their emissions could reach 2.5 billion tons of CO2 equivalent by 2030, alongside high water consumption stressing resources, especially in Southern Europe, which saw historic reductions in its waterways in the summer of 2022. Pressures on networks have led some governments, like Ireland, to restrict the establishment of new data centers until 2028.

To tackle these challenges, Brussels is turning to renewable energy storage technologies, with vanadium flow batteries (VRFBs) emerging as a promising solution due to their high capacity for long-term energy storage. In this context, Spain has implemented a project at the Son Orlandis solar power plant, where a 5.5 megawatt-hour battery was combined with a 3.34 megawatt solar system to ensure more stable supply. In Germany, a small microgrid was established in the Pfinztal River Valley with a 10-megawatt-hour battery, integrating solar and wind power. AI also contributes to analyzing energy consumption and managing storage, enhancing network efficiency and reducing reliance on traditional energy. This could increase data centers’ reliance on renewable energy in the future, reinforcing the integration of technological development and environmental sustainability and supporting Europe’s transition towards a low-emission digital economy.

Regulatory and Cultural Flexibility: European startups face regulatory and cultural challenges that may constrain their competitiveness in AI. The General Data Protection Regulation (GDPR), enacted on April 27, 2016, imposes restrictions on data collection and use, limiting opportunities to develop models based on vast amounts of information, unlike the situation in the US and China. Additionally, the variability of legislation between EU countries complicates the expansion of startups and raises operational costs, unlike the relatively homogeneous regulatory environment faced by their global competitors. At the Paris AI Summit in 2023, Yann LeCun, Chief AI Scientist at Meta, warned about the impact of restrictions on open-source models on the pace of innovation, indicating that models like DeepMind benefited from more open environments. Culturally, some European companies face weaker professional commitment compared to American firms, which may negatively impact their competitiveness.

In conclusion, the European Union aims to enhance its position as a global technological hub by developing a balanced AI model focused on protecting European values; therefore, the success of this model depends on Brussels’ ability to address the multiple and interconnected challenges, including implementing legislation and supporting innovation in a competitive environment. This could lead to major influences on the global technological system by reshaping industrial standards and ensuring that major companies take into account Europe’s vision centered on AI governance. However, any delays in this process could reinforce the dominance of American and Chinese models, widening the digital gap. In a changing strategic reality, the EU will have to adapt to these challenges to ensure its resilience in the AI race, focusing on achieving a balance between regulation and efficiency to meet its objectives effectively.

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