Brussels\’ AI Ambitions May Boost Big Tech Power, Watchdog Warns

European AI Start‑ups May Unintentionally Empower U.S. Tech Giants, According to New Report

Key Findings

• Support Offered – The report highlights that public funding and subsidies aimed at nurturing European artificial‑intelligence firms could inadvertently boost their alignment with U.S. corporate partners.
• Dominance Trends – Microsoft, Amazon and other American tech behemoths stand to gain from these collaborations, gaining deeper access to European talent and markets.
• Long‑Term Impact – While the initial support intends to foster innovation locally, the analysis warns that it might consolidate an existing imbalance favoring U.S. leaders in AI.

Implications for the European Tech Ecosystem

European policymakers and investors will need to reassess funding frameworks to avoid unintentionally ceding control over emerging AI technologies to foreign corporations. Ensuring fair competition, protecting data sovereignty, and fostering independent growth are now presented as top priorities.

European AI Funding: A Double-Edged Sword?

Racing to Back Local Innovators

Governments across Europe are hastening to pour billions into artificial intelligence, with the hope of elevating regional powerhouses like Mistral. Yet a newly released analysis raises the stakes by suggesting that these efforts might also be unwittingly bolstering the very giants that dominate the tech landscape.

Key Findings from the SOMO Report

• Heavy Reliance on U.S. Infrastructure: Leading AI start‑ups—including OpenAI, Anthropic, and Mistral—depend on a limited set of U.S. suppliers for essential hardware, cloud services, and computing platforms.
• Powerhouses Behind the Curtain: The foundations of these companies rest on the contributions of Nvidia, Amazon, Google, and Microsoft, whose products form the backbone of their operations.
• Implications for European Autonomy: The reliance on foreign infrastructure could undermine the objective of building a truly independent, home‑grown AI ecosystem.

Expert Perspective

Margarida Silva, the report’s author, noted:

“At first glance, these start‑ups appear as fresh challengers.” “But a closer look reveals they are built on foundations laid by Nvidia, Amazon, Google, and Microsoft.”

What This Means for Policy Makers

While the surge of funding is indispensable for fostering innovation, the findings underscore the need to evaluate the ecosystem’s dependencies. Aligning investment strategies with infrastructure diversification could help safeguard Europe’s competitive edge in the AI arena.

Start-ups dependency of Big Tech

Powerhouses Behind Generative AI

Nvidia’s Dominance in Hardware

Training sophisticated AI models demands immense computational resources, almost all of which run on Nvidia’s custom chips. A recent study highlights that 11 of the top 12 generative‑AI startups rely on Nvidia’s hardware to develop and operate their systems.

• • Primarily powered by Nvidia GPUs
• • Proprietary software stack enhances performance
• • Competitive moat difficult for other vendors to breach

Cloud Infrastructure as a Critical Enabler

Beyond hardware, startups need scalable cloud platforms to train and deploy their AI. The survey found that 10 of the 12 firms depend on Microsoft, Amazon, or Google for cloud services.

• • Microsoft Azure, Amazon Web Services (AWS), and Google Cloud dominate
• • Access to these platforms often comes with strategic agreements

Strategic Partnerships Followed by Exclusive Rights

In return for the computing power, Big Tech firms frequently secure exclusive distribution agreements. A notable example is Microsoft’s hefty investment in the French startup Mistral, granting it priority access to Mistral’s models via Azure.

EU Scrutiny and Legislative Response

The recent strikes by European Parliament critics stem from the EU Act, which aims to prevent European developers from becoming overly dependent on Big Tech. The act seeks to level the playing field and bolster local innovation ecosystems.

Gatekeepers to the market

Dominance of Big Tech in the AI Marketplace

When it comes to distributing artificial‑intelligence tools, the largest cloud providers steer the industry. A study of twelve start‑ups found that nine of them host their AI models on platforms operated by Amazon, Microsoft or Google, solidifying these giants as the primary access points for businesses and government agencies looking to implement AI solutions.

Start‑ups’ Reliance on Cloud Giants

• Seven start‑ups run their models on AWS (Amazon Web Services).
• Two deploy through Microsoft Azure.
• One uses Google Cloud Platform.
• These platforms effectively gatekeep the integration of AI into commercial and public workflows.

Illustrative Example: The European Parliament

The European Parliament selected the Claude model from Anthropic for managing its digital archives. Because only Amazon Web Services holds the necessary contract within the European Union, the Parliament’s choice was confined to models available via that cloud provider.

AI sovereignty in question

EU AI Strategy Under Scrutiny

The recent investigation casts doubt on Europe’s approach to carving out its place in what experts dub the “AI race.” While the European Union and numerous member states pour billions into building domestic AI talent, the underlying reality is that many of those resources could inadvertently bolster U.S. supremacy.

Investment Foundations Questioned

According to Silva, Europe is intent on cultivating its own AI industry, yet the backbone of this initiative remains largely in the hands of a select group of American corporations. This imbalance raises concerns that European advancements may ultimately reinforce the very dominance they aim to counter.

Immediate Action Called for

• Inspect current cloud agreements to prevent excessive concentration.
• Set clear limits on market dominance to guard against monopolistic growth.
• Guarantee that businesses can switch providers without undue barriers.

The SOMO advocacy group urges competition regulators at both the EU and national levels to respond swiftly. Failure to intervene risks mirroring past technological consolidations, where a handful of firms evolved into gatekeepers that controlled vast markets.

Looking Ahead

The report warns that, unless decisive measures are taken, the AI sector may sweep across the same trajectory as previous tech revolutions, ultimately compromising Europe’s aspirations for independence in the global AI arena.