During last year’s Olympic Games, the Grand Palais in Paris was filled with fencers trying to skewer each other. Last week, the vast, glass-ceilinged exhibition hall saw competition of a different kind as politicians parried over AI.
Emmanuel Macron, the hyper-active host of the Paris AI Action Summit, proved particularly nimble-footed, deflecting attacks from some of the more aggressive American participants and delivering some thrusts of his own.
Positioning France as an AI powerhouse, Macron announced €109bn of investments into data centre infrastructure. More than 60 companies also signed up to the EU AI Champions Initiative pledging to invest a further €150bn into European AI over the next five years. The EU topped this up with €50bn as part of its new mission to sharpen European competitiveness.
“Europe has all the essentials for a resilient and competitive AI infrastructure: talent, capital and a strong industrial backbone,” said Jeannette zu Fürstenburg, European managing director at General Catalyst and prime mover behind the EU AI Champions initiative.
Even some American participants were impressed by Europe’s new-found ambition even if they questioned the weight of money. Four big US tech companies — Microsoft, Alphabet, Amazon and Meta — are on track to spend $320bn on AI infrastructure this year alone. Even a bulked-up Mistral, France’s national AI champion, is lightweight in comparison with US foundation model companies.
But there are three reasons to believe that Europe’s AI industry might yet thrive.
First, every great technological platform shift opens up ground for new ideas to emerge and new business models to be created. As several speakers told the Visionaries Unplugged conference in Paris last week, every workflow across every industry — and slice of our personal lives — can now be reinvented using AI.
Industrial supply chains, financial invoicing, green energy distribution, skincare treatments, you name it, are all ripe for disruption — even if there is a risk of the hype bubble bursting with agentic AI.
There is no reason why inventive European startups cannot excel at developing AI applications. “When you look at the potential of AI, 95% of the value will be at the app layer,” says Rob Lacher, founding partner of Visionaries Club.
Second, Europe, like China, is mostly pursuing the open-source AI model route. That may increase the possibilities for more open innovation, radical collaboration and faster scaling of business models. The release of DeepSeek’s open-source reasoning model that so stunned the US stock market last month shows that smart and nimble AI startups can compete. Even Sam Altman, cofounder of OpenAI that mostly develops proprietary models, has admitted the company has been “on the wrong side of history” on this one.
Third, whisper it softly, there may be a new sense of realism about regulation in Europe. The EU commission has promised an unprecedented simplification of its rules and last week scrapped proposals that would have empowered consumers to claim compensation for harms caused by AI. It has also promised to establish a 28th regime for EU companies creating a common incorporation template that could become a kind of “Delaware for startups."
Andreas Klinger, the chief evangelist of EU Inc, which has been campaigning for the 28th regime, says that the two biggest regulatory challenges for startups are fragmentation and uncertainty. He now urges all startups to get stuck in and press their national governments to support the regime. “The real battle ground now is the member states,” he says.
In recent years, Europe has grown used to the sound of opportunities whizzing past. For the moment, most eyes remain fixated on Trump and his Big Tech buddies in the US. But as AI opens up infinite new business opportunities, European entrepreneurs have a fresh chance to compete. They should seize it.
