Some races are won or lost in the first moments after the starting whistle, so let\u2019s get this out of the way: as a whole, Europe is not competitive with the U.S. or China in developing the high-scale, foundational large language models (LLMs) on which the AI economy depends.\u00a0\u00a0<\/p>\n
The continent\u2019s sole noteworthy LLM, France\u2019s Mistral, is the exception that proves the rule, and still substantially smaller than those of global market leaders like OpenAI, Google<\/a>, Meta<\/a>, Deepseek or Anthropic. The sums being invested into these American and Chinese models make catching up unlikely.\u00a0\u00a0<\/p>\n Does this mean that Europe has lost its chance to benefit from the AI revolution on equal terms with the U.S.?\u00a0\u00a0<\/p>\n Not necessarily. The value of AI mostly manifests in how firms use the technology, says Matthias Tauber, who leads Boston Consulting Group\u2019s operations in Europe, Middle East, South America, and Africa. \u201cWhen it comes to AI adoption, we don\u2019t see a difference between European or U.S. companies. Whether they will be winners, yes or no, will be determined by who drives adoption faster,\u201d he tells Fortune.\u00a0\u00a0<\/p>\n Dominic King, EMEA research lead at Dublin-based consultancy and IT firm Accenture<\/a>, agrees: \u201cEuropean companies are well-positioned to add value by building applications on top of general-purpose U.S. models.\u201d\u00a0\u00a0<\/p>\n In other words, it\u2019s still all to play for.\u00a0<\/p>\n Which European companies are ahead?<\/strong>\u00a0<\/p>\n When it comes to AI adoption, Europe still has its work cut out for it. According to the European Parliament, only 13.5% of EU companies were using AI as of last year. While that\u2019s no doubt increased substantially since, it\u2019s a far cry from Europe\u2019s 75% target<\/a>. It\u2019s also likely to be well behind the U.S., with McKinsey<\/a> estimating a 45-70%<\/a> transatlantic adoption gap in the same year.\u00a0\u00a0<\/p>\n Zoom<\/a> in, however, and you\u2019ll see a more nuanced picture, with many European firms at least keeping up with their global competitors.\u00a0\u00a0<\/p>\n \u201cWhen it comes to AI adoption, we don\u2019t see a difference between European or U.S. companies. Whether they will be winners, yes or no, will be determined by who drives adoption faster.\u201dMatthias Tauber, Head of BCG Europe, Middle East, South America and Africa<\/p>\n<\/blockquote>\n Much depends on the size of the business. Accenture research<\/a> on Europe found a clear relationship between the strength of an organisation\u2019s AI capabilities, such as its talent and data governance, and its AI deployment. Larger companies are \u201ctypically able to invest more, have stronger change management skills and benefit from larger datasets,\u201d King says.\u00a0<\/p>\n Which companies are ahead also depends on their sector. Alongside the obvious candidates like IT, many of Europe\u2019s leading industries\u2014like automotive, biopharma, fintech and aerospace\u2014are among those where AI significantly impacts core activities, rather than just supporting functions. This makes them both ripe to benefit from AI deployment, and vulnerable to external disruption of the kind already playing out in electric vehicles.\u00a0<\/p>\n That blend of threat and opportunity has made firms in these sectors more likely to actively lean into the new technology. \u201cHere we see early adopters boosting productivity with AI, for example, by accelerating drug discovery, conducting more accurate simulations and improving product design,\u201d adds King.\u00a0<\/p>\n Accenture itself, while best understood as a multinational with European headquarters rather than as a distinctly European company, is among those early adopters. In 2023, Accenture announced it would set aside $3 billion to integrate AI internally and to become experts on it for its clients, per previous <\/a>Fortune<\/a> reporting<\/a>.\u00a0\u00a0<\/p>\n The firm booked $4.1 billion for GenAI work, and $1.8 billion in revenue, as of its Q3 earnings call in June<\/a>, with embedded AI, deep industrial knowledge and energy efficiency emerging as key themes. It is aiming to build an 80,000-strong data and AI workforce by 2026, having already hit 75,000.\u00a0\u00a0<\/p>\n Larger companies are \u201ctypically able to invest more, have stronger change management skills and benefit from larger datasets.\u201d<\/p>\n Dominic King, EMEA research lead, Accenture<\/p>\n<\/blockquote>\n Schneider Electric<\/a> is another European company going big on AI. The industrial technology and energy management group generated over \u20ac100 million (around $116.9 million) in business value from embedding AI into its operations, Gwenaelle Avice Huet, its executive vice president of operations in Europe, tells Fortune. That figure, which actually dates back to as early as 2022<\/a>, is a result of cost savings and operational efficiencies it made via its \u201cself-healing\u201d supply chain platform.\u00a0\u00a0<\/p>\n The French multinational uses AI in its supply chain, financial advisory and customer service. \u201cOur internal Jo-ChatGPT platform enables employees to securely leverage generative AI, boosting productivity and creativity while maintaining data integrity,\u201d Avice Huet adds. Externally, AI is also used<\/a> in Schneider Electric\u2019s flagship products, such as energy management and industrial automation.\u00a0\u00a0<\/p>\n The main way that Schneider Electric benefits from the AI boom is more direct, though, due to its role as a leading global supplier of electrical components used in data centers, alongside others like the Netherlands\u2019 ASML, a key technology supplier for advanced semiconductor manufacturers.\u00a0<\/p>\n To give a sense of the size of the market they are supplying, in the EU alone \u20ac100 billion in data center investments are projected by 2030, according to the European Data Centre Association<\/a>, although this is likely to be substantially lower than the equivalent in the U.S., which McKinsey estimates<\/a> will alone receive around 40% of global data center investment this decade.\u00a0<\/p>\n Some of this investment is coming from companies that you wouldn\u2019t normally call tech firms, with EU businesses such as Lidl\u2019s parent company, Schwarz Gruppe, eyeing their own data centers<\/a>, partly from a desire to reduce Europe\u2019s dependence on American capabilities.\u00a0\u00a0<\/p>\n Not everyone is proving so enthusiastic, however. As in other countries, there are also prominent sectors of the European economy that tend to lag in AI adoption, such as utilities and telecommunications\u2014ironically, sectors that themselves underpin the rollout of AI. King explains that these struggle with fragmentation, access to capital, and weak AI capabilities due to low AI literacy and a lack of concrete use cases with clear return on investment.\u00a0<\/p>\n A double infrastructure gap<\/strong>\u00a0<\/p>\n Despite some stragglers, the big picture is of soaring demand for AI, but even with the vast sums being invested in European data centers, supply is still struggling to keep up. As a result, infrastructure risks becoming a critical bottleneck<\/a>, making AI more expensive and slower to use. Data center vacancy rates\u2014a measure of their available additional capacity\u2014are at an all-time low<\/a> on the continent.\u00a0\u00a0<\/p>\n AI adoption is also likely to come up against another infrastructure bottleneck, in the energy system. Data centers use substantial electricity\u2014Goldman Sachs predicts<\/a> they could add 40-50% to Europe\u2019s power demand over ten years.\u00a0\u00a0<\/p>\n This causes two problems. First, the additional burden on the grid will apply upward pressure on Europe\u2019s high energy prices, which already weigh on industrial competitiveness. Second, if Europe\u2019s energy infrastructure investments can\u2019t keep up with data center demand, then it risks constraining AI adoption for European businesses.\u00a0<\/p>\n It\u2019s not just the lack of power per se. Data centers depend on an uninterrupted energy supply, but the product they facilitate creates demand spikes that make outages more likely. If there\u2019s too much volatility, it can impede their operations, add costs and disincentivize further investment.\u00a0\u00a0<\/p>\n \u201cIf you\u2019re a data center operator, you\u2019re sat in the middle of double uncertainty, with more volatility coming in on the demand side and more volatility on the energy market side,\u201d says Jade Batstone, cofounder and CEO of Zendo, a startup helping data centers become more energy efficient.\u00a0\u00a0<\/p>\n The danger for Europe\u2019s competitiveness is that its economy could fall relatively further behind on both AI and energy prices, in the absence of accelerated, simultaneous investment into both sets of infrastructure.\u00a0\u00a0<\/p>\n It would be a mistake to see AI only as a problem for the energy sector, however. It can also be part of the solution. The International Energy Agency (IEA) projects<\/a> that AI could unlock an additional 175 gigawatts of global energy capacity simply by improving the efficiency of grids, which is more than just a marginal efficiency gain: it\u2019s higher than the total projected global energy demand for data centers by 2030, and five times more than Europe\u2019s 2030 projected power demand<\/a>.\u00a0<\/p>\n Standing firm on going green\u00a0<\/strong>\u00a0<\/p>\n This points to the one area where Europe has something of an advantage over the U.S.\u2014the intersection between data centers and renewable power.\u00a0\u00a0<\/p>\n Europe has \u201ca strong legacy\u201d in data centers, clean technology and manufacturing, meaning its competitive edge lies in \u201cbuilding the resilient, sustainable infrastructure that powers AI,\u201d argues Avice Huet, pointing to Schneider Electric\u2019s partnership with Nvidia<\/a> on AI-native data center designs.\u00a0<\/p>\n \u201cWhile high energy costs may weigh on Europe\u2019s competitiveness today, particularly in energy-intensive industries, smart deployment of AI combined with the continent\u2019s leadership in renewables technologies such as offshore wind could help reduce both emissions and costs in the long-term,\u201d King adds.\u00a0\u00a0<\/p>\n Such an outcome is particularly appealing for businesses that are committed to both AI and decarbonization, with large tech firms such as Google setting the bar with commitments to be fully powered by renewable energy by 2030. Indeed, BNP Paribas<\/a> notes that most hyperscalers favor renewables <\/a>even on economic grounds alone, owing to the lower operational costs from solar, geothermal and wind.\u00a0<\/p>\n But fully renewable data centers may not be so straightforward to achieve, notes Zendo cofounder and COO Drew Barrett: \u201cYou\u2019re going to really struggle to do that in grids that haven\u2019t deeply decarbonized already.\u201d\u00a0\u00a0<\/p>\n This is where Europe\u2019s advantage comes in. While no one has hit the full decarbonization bar yet, renewables did generate 50% of all electricity<\/a> used in the European Union last year, per the IEA\u2014comfortably the highest of the major economies. Brussels has also set the goal for data centers<\/a> to be climate neutral by 2030, requiring them to report on energy consumption, how much of that is renewable, and water usage.\u00a0\u00a0<\/p>\n While some may see such regulation as an additional barrier to investment, Avice Huet argues that \u201cdecarbonization is not a constraint on competitiveness; it is central to Europe\u2019s ambitions for growth and industrial strength.\u201d\u00a0<\/p>\n This position mirrors the EU\u2019s Clean Industrial Deal<\/a>, a strategy to build a competitive niche in clean technologies, which could extend to \u2018green\u2019 data centers\u2014especially as the U.S. looks to fossil fuels<\/a> to power its computing needs, following President Trump\u2019s AI action plan, which was notably silent on renewables.\u00a0\u00a0<\/p>\n But while European lawmakers\u2019 studied focus on consumers over businesses has resulted in world-leading laws on data protection and sustainability, Tauber says it has still complicated the private sector\u2019s ability to actually compete. Given the complexity and fragmentation of EU legislation, which is interpreted differently across member states and sits on top of multiple layers of domestic law, Europe should deregulate, he says.\u00a0<\/p>\n There has been some progress in simplifying regulations. The EU\u2019s AI Continent Action Plan proposes streamlined permitting for data centers that meet energy and water efficiency standards, meaning green data centers are preferentially incentivized. Avice Huet sounds an optimistic note: \u201cWith a continued focus on cutting the red tape, electrification, digitalization, and grid modernisation, Europe can emerge stronger, more resilient, and more competitive on the world stage.\u201d\u00a0\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"Some races are won or lost in the first moments after the starting whistle, so let\u2019s get this…\n","protected":false},"author":3,"featured_media":212719,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[691,738,261,4315,3432,5880,3229,158,1439,67,132,68],"class_list":{"0":"post-212718","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-companies","11":"tag-competition","12":"tag-data","13":"tag-data-center","14":"tag-regulation","15":"tag-technology","16":"tag-u-s","17":"tag-united-states","18":"tag-unitedstates","19":"tag-us"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/212718","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=212718"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/212718\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/212719"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=212718"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=212718"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=212718"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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