VivaTech 25 Day 1 – Anchor Tenant

Nvidia lends Europe some of its shine.

• Nvidia’s support of VivaTech gives it a greater level of credibility, which combined with Europe emerging from its AI slumber, gives it a chance to catch up as long as the regulators can get out of the way.
• VivaTech is now one of Europe’s larger technology shows following the boost that Nvidia has given it with Jensen opening the show with his normal personable and unscripted performance to a smaller-than-San-Jose, but still packed house.
• Mr Macron also made his usual appearance but also went on stage to encourage the European companies to support the nascent effort to create a thriving AI ecosystem based in Europe.
• The floor is busy, the croissants have sold out, and delegates have come from all over the world to attend, but there are still plenty of places to sit, and there are no queues for the gents, meaning that this is still far from the madhouse of CES.
• This year, the focus is on AI with the idea that Europe is now poised to become a powerhouse in AI despite lagging far behind for the last 3 years.
• I think that Europe has the potential to catch up, but what happens at VivaTech is all talk, and Europe often gets into trouble when the talk has to turn into action.
• Sovereign AI is an emerging theme in the industry, and this is going to be almost as important to Europe as it is to the Middle East.
• 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 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.
• This is how the Middle East has viewed AI for some time, as it has a large dependence on petrochemicals, and this offers a great opportunity to diversify the economy and also to provide services to the rest of the Global South.
• 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.
• Apple, Google and Meta Platforms have all declined or delayed launches of AI services in Europe, which sends a negative signal to any entrepreneur thinking of creating an AI start-up.
• Furthermore, the Middle East is now competing aggressively for talent and, with its good quality of life and attractive tax regime, it is starting to emerge as a viable destination for start-ups and established companies.
• There is a small but rapidly growing ecosystem of start-ups which is being actively supported by the gigantic investments that both the UAE and Saudi Arabia are making in providing infrastructure for AI.
• Ironically, the Middle Eastern companies are all hanging out in Hall 2, just waiting to pounce on any opportunity to recruit start-ups, while Abu Dhabi is offering virtual tours of the Emirate just outside the entrance for anyone sensible enough to consider setting up there.
• (Radio Free Mobile has been based in Abu Dhabi since 2015 and UAE since its inception in 2012).
• Against the backdrop of momentum in the Middle East, Europe has finally awoken from its slumber and is talking about making the kind of investments that will allow it to leverage its industrial history to become a relevant global player.
• The main issue for me remains regulation, as Ministers from large EU member states will admit behind closed doors that there has been an over-correction on regulation and that things need to be done a bit differently.
• I have seen no immediate change from the EU, but I think that this is coming as the recent deals announced in the Middle East are a sign of what Europe has been missing out on, and it is clear that it wants a piece of the action.
• If there are going to be problems, this is where they are going to occur, and as far as Europe’s ambitions go, this will be the deciding factor between a major recovery or letting the Middle East run away with the sovereign AI game.