Trump’s
$500B AI plan is ‘slap in the face’ for Europe
Massive U.S.
investments in artificial intelligence leave EU ambitions in the dust.
January 22,
2025 6:40 pm CET
By Pieter
Haeck
BRUSSELS—
The United States just fired the starting gun on an artificial intelligence
race where Europe won't be able to keep up.
U.S.
President Donald Trump on Tuesday unveiled a half-trillion-dollar project to
build the infrastructure needed to cement U.S. AI dominance in the years to
come, starting with a data center in Texas.
The level of
ambition has jaws dropping in Europe where political leaders have pinned hopes
on AI helping to restore the continent's global leadership.
“This is
more than a wake-up call; this is a slap in our face,” said Christian Miele,
general partner at venture capital firm Headline, which invests in French AI
firm Mistral.
European
Commission President Ursula von der Leyen has talked big about the EU becoming
a leader in AI innovation as part of a larger bid to help the region catch up
with the U.S. and China. French President Emmanuel Macron is aiming for a
similar pitch at a global AI summit he'll host next month.
The size of
the U.S. plan blows the EU pitch out of the water, and reveals the U.S. focus
on keeping up with China. Europe – which has already lost out on social media,
cloud and chips – looks already set to fall behind on AI.
In just a
week, the U.S. has taken a radically more aggressive stance on AI, restricting
the export of its AI chips to the rest of the world, ditching an AI regulation
push and now rolling out an investment program that one investor likened to the
Manhattan Project — the U.S. scheme to produce a nuclear weapon in the 1940s.
Magnitude
The EU does
have plans to foster the rollout of the hardware needed to train artificial
intelligence models, such as European rivals to OpenAI’s chatbot ChatGPT.
In December,
the Commission selected seven sites across the bloc that would receive funding
to build AI-optimized supercomputers, open for startups and researchers to
train their AI models.
The total
amount of that investment was €1.5 billion, of which half comes from the EU
budget.
The EU’s
investment “is several orders of magnitude below what has just been announced
in the U.S.,” said Holger Hoos, AI professor at RWTH Aachen University and
chair of CAIRNE, a network of AI research labs.
This shows
that the EU doesn't have enough ambition, he said.
Venture
capitalist Miele echoes this: “The strategic relevance of AI has not yet been
understood at the political level."
Trump's
Stargate Project plans to deploy $100 billion immediately, leaning on private
funding and equity partners including Japan's SoftBank, AI pioneer OpenAI,
software giant Oracle and the investor MGX. U.K. chips firm Arm and U.S. AI
chips designer Nvidia are technology partners, along with Microsoft which works
with OpenAI, including by providing its Azure cloud services.
The EU also
has no leading AI companies that can drum up private capital to the same
extent.
“We don’t
have these Big Tech champions that the U.S. has; we don’t have this luxury of
being able to work with them in order to mobilize private capital,” said
Giorgos Verdi, policy fellow at the European Council for Foreign Relations.
“I cannot
think of, let’s say, Mistral being able to mobilize this kind of investment
capacity and building these huge AI data centers,” he said.
Europe’s
fragmented financial markets have always been a barrier for European startups
and there's so far been little real progress on plans to improve the region's
capital markets.
Energy is
another roadblock for Europe’s ability to match the U.S. AI push.
Data
centers, especially those powering AI, are energy-intensive operations.
President Trump has embraced the “drill baby drill” slogan and declared a
“national energy emergency” to boost gas and oil production.
In Europe,
energy prices have skyrocketed in the wake of the war in Ukraine, with many
companies saying high costs make it hard for them to compete with global
rivals.
“The kind of
energy that is going to be needed in order to operate infrastructure on that
scale is going to be insane,” said Miele.
Policy
pipeline
The U.S.
move could yet shock the EU into some sort of action.
In a
Wednesday debate at the European Parliament, von der Leyen singled out AI as a
"strategic area" where her Commission needs to coordinate with
national governments on investment.
Investors,
startup and tech lobby groups, and European lawmakers urged Brussels to go
further and seize the moment with a comprehensive AI hardware plan.
France
Digitale, France's leading tech and startup lobby group, said it seemed
"inevitable" to propose "structural reforms" in funding
innovation.
Aura Salla,
a Finnish member of the European Parliament, called for urgent attention to
capital markets.
"We
cannot fix the investment gap with public financing, we must attract more
private investment," she said.
The
Commission has a pipeline of policy initiatives to try and fix some of its
ills. None of them involve big investment.
Next week,
von der Leyen unveils a competitiveness compass to show how she'll try to get
the economy going. There are also plans for a single corporate code for
startups, the 28th regime, to end a current regulatory patchwork.
But beyond
that, experts warn that the EU could quickly face a reality check about its
ability to develop ambitious OpenAI rivals and should opt for smaller projects
and models instead.
"At
which point do we want to accept that we might not be able to compete with the
U.S.?" Verdi asked.
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