Can €1bn Buy Europe's AI Independence? Experts Warn Brussels Needs More Than Ambition

The European Union's push for digital sovereignty through its new Apply AI strategy is being met with scepticism from industry experts, who question whether Brussels' proposed €1 billion investment is anywhere near enough to compete with the United States and China in the global race for artificial intelligence.

The plan, to be unveiled this week by EU tech chief Henna Virkkunen, seeks to accelerate the development and adoption of European-made AI tools and reduce reliance on foreign technologies, according to a Financial Times report.

The initiative follows growing unease in Brussels about overdependence on American cloud providers and chipmakers, as well as Chinese advances in generative AI and defence technology.

But analysts warn that the EU's funding scale remains modest compared with the vast sums being poured into AI by private and state-backed entities elsewhere. In the US, companies such as Microsoft, Google and Amazon have collectively invested hundreds of billions of dollars in AI infrastructure and model development.

Meanwhile, China has mobilised state funds exceeding $40 billion for its national AI strategy, focusing on semiconductors, supercomputing and large language models.

A Drop in the Ocean

'The EU's €1 billion plan is a statement of intent, but not a game-changer,' said Dr Anna Gruber, a digital policy researcher at the Centre for European Reform. 'It sends the right signal politically, but financially, it's a drop in the ocean compared with what's happening in Silicon Valley or Shenzhen.'

The European Commission insists that its approach is not to replicate American-style spending but to focus on targeted investment that strengthens European competitiveness and ensures technological independence in critical sectors such as healthcare, manufacturing and defence.

However, critics argue that without a stronger pipeline of venture funding and a more unified digital market, even the most well-crafted strategy will fall short. 'Europe is excellent at setting regulations and frameworks but slow at scaling innovation,' said Philippe Marchand, co-founder of Paris-based AI firm Nexora. 'We need less red tape and more capital, otherwise our start-ups will keep moving to the US.'

Balancing Regulation and Growth

Europe's AI ecosystem has long been defined by its focus on ethics and accountability, culminating in the AI Act, which imposes strict rules on how companies develop and deploy AI systems. While widely praised for its human-centric approach, the legislation has also drawn criticism from developers who say it creates uncertainty and deters investors.

'Europe is trying to be the referee and the player at the same time,' said Marchand. 'The AI Act is necessary, but it slows us down when the rest of the world is sprinting.'

Brussels maintains that the Apply AI initiative will bridge that gap by directing funds toward practical deployment, particularly within public administrations where European-built AI can be scaled and tested. The Commission argues that this will stimulate demand, boost local innovation and attract private capital to the sector.

Playing Catch-Up

Yet the challenge remains steep. Europe's leading AI firms, such as France's Mistral and Germany's Helsing, continue to rely heavily on US-based cloud services, chips from Nvidia and venture capital from American investors.

For many experts, the question is not whether Europe can lead in AI, but whether it can afford to play catch-up under its current budget constraints.

'Europe has the talent, the ethics and the political will,' Gruber said. 'But unless it matches that with real financial muscle, its dream of AI sovereignty will remain just that, a dream.'

The European Union's push for digital sovereignty through its new Apply AI strategy is being met with scepticism from industry experts, who question whether Brussels' proposed €1 billion investment is anywhere near enough to compete with the United States and China in the global race for artificial intelligence.

The plan, to be unveiled this week by EU tech chief Henna Virkkunen, seeks to accelerate the development and adoption of European-made AI tools and reduce reliance on foreign technologies. The initiative follows growing unease in Brussels about overdependence on American cloud providers and chipmakers, as well as Chinese advances in generative AI and defence technology.

But analysts warn that the EU's funding scale remains modest compared with the vast sums being poured into AI by private and state-backed entities elsewhere. In the US, companies such as Microsoft, Google and Amazon have collectively invested hundreds of billions of dollars in AI infrastructure and model development. Meanwhile, China has mobilised state funds exceeding $40 billion for its national AI strategy, focusing on semiconductors, supercomputing and large language models.

A Drop in the Ocean

'The EU's €1 billion plan is a statement of intent, but not a game-changer,' said Dr Anna Gruber, a digital policy researcher at the Centre for European Reform. 'It sends the right signal politically, but financially, it's a drop in the ocean compared with what's happening in Silicon Valley or Shenzhen.'

The European Commission insists that its approach is not to replicate American-style spending but to focus on targeted investment that strengthens European competitiveness and ensures technological independence in critical sectors such as healthcare, manufacturing and defence.

However, critics argue that without a stronger pipeline of venture funding and a more unified digital market, even the most well-crafted strategy will fall short. 'Europe is excellent at setting regulations and frameworks but slow at scaling innovation,' said Philippe Marchand, co-founder of Paris-based AI firm Nexora. 'We need less red tape and more capital, otherwise our start-ups will keep moving to the US.'

Balancing Regulation and Growth

Europe's AI ecosystem has long been defined by its focus on ethics and accountability, culminating in the AI Act, which imposes strict rules on how companies develop and deploy AI systems. While widely praised for its human-centric approach, the legislation has also drawn criticism from developers who say it creates uncertainty and deters investors.

'Europe is trying to be the referee and the player at the same time,' said Marchand. 'The AI Act is necessary, but it slows us down when the rest of the world is sprinting.'

Brussels maintains that the Apply AI initiative will bridge that gap by directing funds toward practical deployment, particularly within public administrations where European-built AI can be scaled and tested. The Commission argues that this will stimulate demand, boost local innovation and attract private capital to the sector.

Playing Catch-Up

Yet the challenge remains steep. Europe's leading AI firms, such as France's Mistral and Germany's Helsing, continue to rely heavily on US-based cloud services, chips from Nvidia and venture capital from American investors.

For many experts, the question is not whether Europe can lead in AI, but whether it can afford to play catch-up under its current budget constraints.

'Europe has the talent, the ethics and the political will,' Gruber said. 'But unless it matches that with real financial muscle, its dream of AI sovereignty will remain just that, a dream.'