Sovereign AI – European Rebellion

European industry exposes the open secret.

• With more than 45 giants of European industry begging the EU to delay the implementation of its AI Act, it becomes clear that this act needs to be rewritten if Europe wants to achieve anything in AI and prevent the Middle East from running away with the Sovereign AI game.
• Sovereign AI is AI where the state has a degree of involvement in the building, operation or financing of a project, and outside of China, Europe and the Middle East are two regions where it is likely to be most important.
• This is because, unlike the USA, Europe is made up of many different states, speaks many languages and is culturally very diverse, and there is not very much digital data in languages other than English and Chinese.
• Furthermore, countries are going to want critical industries like financial services, defence and healthcare to be run within their borders, which will require a degree of state involvement.
• This is why Nvidia is pushing this angle of AI in Europe and the Middle East far harder than it does at home, and given the subtle differences between enterprise AI and sovereign AI, this is an area where Europe could lead.
• From an infrastructure perspective, the equipment is exactly the same, but states will require greater security and reliability for these systems, which will require slight differences in the overall architecture in both hardware and software.
• Finally, states think that AI is important for the long-term development of their economies, which is why they are now all very keen not to get left behind.
• However, compared to everyone else, including the Middle East, Europe is behind and, rightly or wrongly, has a reputation for having a regulatory environment that is hostile to AI.
• This has been clear for some time, as senior EU representatives and members of European governments have been admitting behind closed doors that the regulation of AI needs to be done differently.
• This has now been made clear in the public sphere as a large number of European companies and organisations have written an open letter to the EU begging it to delay the enforcement of the AI Act (see here).
• Authors of the open letter cite “unclear, overlapping and increasingly complex EU regulations” and are asking for more time to develop an “innovation-friendly implementation strategy and identify pragmatic avenues for regulatory simplification”.
• In plain English, this means we believe that if you don’t rethink the regulation, AI will go elsewhere, and Europe will continue to be a technology wasteland.
• This is a strong contrast to the good showing made by European politicians, company CEOs and start-ups at the VivaTech conference in June, where commitment and support for AI and especially sovereign AI was in evidence everywhere.
• However, as I observed at the time (see here), Europe is really good at talking but often stumbles when it comes to execution.
• This is the first sign of hurdles being thrown in the path of private industry which would like to see Europe become a place to develop and run AI services.
• This, combined with Europe’s more conservative culture, is what leads me to wonder how much of the VivaTech talk and ambition will translate into real AI infrastructure being built.
• This letter is the first test of how the talk of VivaTech will be translated into action, as the AI Act needs reworking, and it remains to be seen how willing the EU will be to do that.
• Failure will be expensive as the Middle East is making a big play for both sovereign and commercial AI and it has the money, space, electricity and desire to make it work.
• This was evident at VivaTech, where both Abu Dhabi and Riyadh had stands promoting the quality, ease and tax-free nature of life in their countries.
• In the UAE, this is beginning to work as capital influx is now being matched with talent influx and even TSMC has been seen scouting the emirate of Abu Dhabi looking for a site to build a fab.
• In the face of this new competitor, Europe has received the memo and understands what it needs to do to catch up in AI, but the ball is now in the court of the EU to amend the AI Act, which I think there is a good chance that it will.
• The price of failure is that the Middle East runs away with the sovereign AI game and Europe is left with a few government servers and not much else.