Europe's Race to Catch Up in Artificial Intelligence

Access to artificial intelligence (AI) models is not only a matter of economic autonomy but also of national security.

For any doubters, this was made clear in mid-June when Anthropic announced that, on US government orders, it would deny all foreign users access to its top AI software, citing national security concerns.

These AI models — Claude Fable 5 and Mythos 5 — are considered particularly effective at identifying vulnerabilities in software.

Germany, for one, must urgently catch up in artificial intelligence, says German Interior Minister Alexander Dobrindt.

In the current situation, it is essential to help shape technological innovation, he said. Otherwise, "you could very quickly end up among the victims," he added, according to the German news agency dpa.

A Franco-German AI response

The German Research Center for Artificial Intelligence (DFKI) told DW that initial efforts have already been agreed upon.

DFKI and its French partner Inria, a public research institute for computer science and automation, are about to sign an agreement to establish a Franco-German AI center.

Offices will be set up in Germany and France starting in July, with operational activities beginning by the fourth quarter of the year, according to DFKI spokesman Andreas Schepers.

One French player has already entered the race: Mistral AI, a French software company focused on artificial intelligence and a European leader in large language models.

By European standards, Mistral is a heavyweight. In September 2025, the company announced it had secured investments of around €1.7 billion ($2 billion at the time), valuing the company at nearly €12 billion.

Earlier, Dutch company ASML, the world's largest supplier of the advanced machines used to print tiny circuits onto computer chips for the semiconductor industry, had acquired an 11% stake in Mistral, according to numerous reports.

Who is looking after European autonomy?

"Europe must develop its own powerful AI offerings to remain effective and competitive," said Bernhard Rohleder, head of Bitkom, a German association representing more than 2,200 companies in the digital industry.

"A country is digitally sovereign if it possesses substantial capabilities in key technologies and can independently decide from which countries to source those technologies it does not develop itself," he told DW.

The German government appears to share this view and implemented a European AI regulation in February.

In a press release, Digital Minister Karsten Wildberger announced plans to create "a lean AI oversight structure clearly focused on the needs of the economy."

He pledged not to establish a new "bloated bureaucracy," but to ensure "safe AI deployment, stronger growth and increased innovative capacity for our companies."

Germany's contribution to a European project

When discussing potential European tech champions of the future, Mistral always seems to be mentioned.

However, Lennart Kuhn from DFKI points to highly innovative German companies as well, including Black Forest Labs, Langdock, Codesphere, Aleph Alpha and Neura Robotics.

Bitkom chief Rohleder also emphasized local strengths.

"Numerous companies in Germany are working on building their own AI offerings," said Rohleder.

"These include foundation models for machine or tabular data, as well as application models in fields such as medicine and education."

What is €12 billion when it comes to AI?

Building new structures requires time, joint effort and, above all, goodwill and a lot of money.

The news that Mistral was valued at €12 billion was therefore very welcome. Yet, how significant is that figure given the incredible scale of global investment in the sector?

"A great deal can be achieved with €12 billion," said Rohleder unequivocally.

But it is not just about money. Equally important is "whether it is possible to attract talent and whether the overall conditions are right," he added. "AI companies need less regulation and a government that acts as an anchor customer, bringing new technologies into application and supporting their scaling."

"The key question is not whether Mistral can overtake the US in the short term," wrote Lennart Kuhn from DFKI. The success of AI models is not determined solely by the valuation of a particular company.

More important are "data sovereignty, regulatory compliance, transparency and control over infrastructure," according to Kuhn. "In these areas, a European provider such as Mistral can certainly develop competitive advantages."

It's not too late for Europe

If Germany and Europe want to avoid falling behind, time is running out.

Four key elements are needed if the continent wants to become a genuine alternative to the US, according to the German Research Center for Artificial Intelligence.

Significantly more investment capital to grow.

Massive investment in European data centers, energy supply and chip infrastructure.

A single market that scales faster, is less fragmented and more uniformly regulated.

Stronger demand for European solutions from local businesses and institutions.

If European companies like those involved in the emerging Franco-German initiative can establish themselves successfully, Europe has a fighting chance, says Bitkom's Bernhard Rohleder.

"European AI providers must, and can, become an alternative to the global players in AI."

This article was originally published in German.