Europe Is Falling Behind in AI. Lutz Finger (first on the left) compared the enterprise value of the … [+] top 10 AI companies in the U.S. vs. Europe. Discussion with Anna Tong (first on the right), Gerard de Graaf, Theos Evgeniou, and Youssef Benathman Idelcaid at the INSEAD Americas Conference 2025 in San Francisco.
Frederic Neema/ Octamedia Production
What should Europe do to compete in AI? French President Emmanuel Macron announced investment pledges to bolster France’s artificial intelligence sector of €109 billion ($112 billion) over the coming years. Is that enough? Europe is dangerously behind. Comparing the enterprise value of the top 10 companies in Europe versus the United States, the U.S. is a full-grown adult at 6 feet 4 inches, while Europe is merely an action figure at 4 inches.
Europe is losing ground in competitiveness, economic growth and global influence. AI won’t replace professionals like lawyers, doctors or teachers — but those who use AI will outcompete those who don’t. The same applies to nations. The EU risks becoming just a consumer of AI rather than a creator or innovator. The €109 billion alone will not necessary help.
AI Is A Tool That Supercharges Humans
AI is a tool that scales productivity. In my online AI courses, students no longer need to code manually. Instead, they use AI to amplify their productivity. A recent study by Erik Brynjolfsson showed that AI can increase worker effectiveness by up to 34% for novice and low-skilled tasks. Now imagine a world where the U.S. and China boost productivity by 34% while Europe remains stagnant.
AI’s Impact Goes Beyond Productivity
This issue is bigger than just economic growth. AI is trained on human interactions and reflects societal norms and biases. Some may remember the experiment where OpenAI completed the sentence: “Three Muslims go to a bar and…” versus “Three Christians/Buddhists/Jews go to a bar and…” The results revealed the model’s biases. Or have you asked OpenAI about capitalism? Will it explain the U.S. or the European version? Now imagine a world where all human-to-machine interactions are based solely on U.S. or Chinese norms. What will this mean for Europe?
What Can Europe Do?
Europe has the ability to act. But it must act now.
1) Invest in AI Education
Europe has considerable knowledge in AI, with a volume of AI publications comparable to that of the U.S. However, this knowledge does not effectively translate into AI applications. Training will be key for Europe. When Google wanted employees to adopt large language models, the first step was mandatory training. AI literacy should be a priority for executives and professionals across industries. I see this in my eCornell certificate program, “Designing and Building AI Solutions,” which helps business leaders leverage AI. After we trained the executives on AI tools, their productivity skyrocketed.
Europe, integrate AI training at every level, from universities to executive leadership programs.
2) Foster Innovation With AI Through Funding
AI is reshaping business models, decision-making, and the workforce. Europe must invest in AI innovation through venture capital and public funding. Cherry Ventures recently closed a $500 million fund. The team — led by Christian Meermann and Filip Dames — focuses much of its investments on AI. It’s an important but small step compared to the U.S.’ $500 billion Stargate initiative. Overall, large European corporations together invested €700 billion less annually compared to their U.S. counterparts, according to a recent report from the World Economic Forum.
Europe, invest in world-class AI startups and corporate initiatives.
3) Create Frameworks That Enable Innovation
Regulation can stifle innovation if done poorly. Europe has focused too much on AI oversight rather than fostering innovation. As Macron warned, “We are regulating ourselves out of the market.” The knowledge of how to foster innovation exists. Francisco Veloso, the dean of INSEAD, together with Lily Fang unveiled a new AI initiative. He has conducted extensive research on innovation in technology. The knowledge exists.
Europe, listen to thought leaders like INSEAD on how to support AI innovation and progress.
Lily Fang introduced INSEAD’s AI initiative, the Institute of Human and Machine Intelligence, at the … [+] 2025 INSEAD Americas Conference.
Frederic Neema/ Octamedia Production
4) Lead in Open-Source AI
AI models are built on mathematical principles and are difficult to restrict. The U.S. restrictions on China failed and led to better models from DeepSeek. Instead of trying to restrict access, let’s focus on open-access AI.
Europe, embrace open-source AI.
Open-source AI would allow Europe to:
Promote innovation by giving startups and researchers access to cutting-edge tools.
Detect and mitigate biases in AI models.
Create customized AI for even the smallest European nations, such as Liechtenstein.
5) Stop Focusing Only on Short-Term Risks
Whenever change happens, incumbents — like Europe — focus on protectionism. In a recent discussion at the INSEAD Americas Conference, Kristin Skogen Lund, former CEO of Schibsted, noted how the media industry initially reacted to the internet. Instead of embracing new business models like streaming, they fought legal battles over IP rights. History is repeating itself with AI. The EU is more focused on regulating access and intellectual property than enabling AI-driven growth.
Europe, enable new business models as AI changes our business landscape.
Kristin Skogen Lund (middle) discusses with Mark Stabile (left), Marylene Delbourg-Delphis (right), … [+] and Alberto Cairo (not visible) how industry leaders can best utilize AI for value and growth. – INSEAD Americas Conference 2025
Frederic Neema/ Octamedia Produc
What About AI Risks?
AI has risks. But they are not the ones Sam Altman wants you to believe. No, AGI is not here, and no, AGI is not taking over. The real risk is human misuse of increasingly powerful AI. The issue isn’t the technology itself but how people apply it. Instead of regulating technology, laws should target harmful outcomes of AI while allowing innovation.
Don’t Give Up On Europe
As DeepSeek has shown, the underdog can still succeed. Europe has a chance to catch up, but it must act now. The global AI race is underway, and Europe cannot afford to sit on the sidelines. Macron’s announcement is a step in the right direction, but funding alone won’t bridge the AI gap between the U.S. and Europe. To compete, Europe must establish the right structural conditions.
AI offers a tremendous opportunity for good. While the U.S. and China battle for dominance, Europe must step up and play a critical role in shaping the future of AI.
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Publish date : 2025-02-10 16:31:00
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