Despite American AI Reign, Europe Still Stands Chance in AI Competition

European AI startups are groomed to succeed by developing applications atop US-based AI platforms like OpenAI and Google, according to prominent European tech entrepreneur, Niklas Zennström.

Drawing parallels to the emergence of mobile and cloud industries, Zennström highlighted that European AI startups can create great value as application providers without competing in building foundational AI models.

“Think what happened with mobile and the cloud: there are a few cloud providers in the world, they enable thousands and thousands of businesses,” Zennström said, adding that “it’s not like everyone needs to be a large language model. You can create value as an application provider.” 

European AI Startup Landscape

The US has always posed a significant threat to foreign tech companies, especially in the past year, leaving European policymakers and investors struggling. Hesitation to back AI startups in Europe fundamentally stems from fears of being left outpaced by Silicon Valley’s well-funded companies, with their transformational new technologies, threatening the region’s competitiveness and national security in Europe’s transformative technological redirection.

Atomico’s State of European Tech reported that the confidence among European entrepreneurs regarding AI funding in Europe reached a new stage the past year. And surveys found that 40% of European AI startups, and their founders, were pessimistic about the European tech future.

Any European tech unicorn, or even hundreds of them, have been created and pointed to the gap in the first stages of funding with the US. Zennström also highlighted that European AI startups can be built on top of AI platforms even if they are from France or US.

“Regardless of whether Europe has a lot of critical [tech] infrastructure that is European,” the Skype co-founder mentioned when talking to Financial Times.

Europe Catching Up in AI

2024 was arduous for the Europe AI opportunities scene, with investors referring to immense difficulties to thrive in the industry, but Zennström still has hope. According to an Accel report, Zennström, published in October, US companies’ heavy money investment pumps in generative AI reached a colossal $48 billion in 2023 and 2024 combined – more than five times as much as in Europe.

“There is so much exciting data that shows we are actually catching up [with the US], we are doing pretty well,” Zennström highlighted.

Europe is facing challenges in the AI industry, true, but nevertheless, AI startups in Europe still have a high chance of success, despite worries of beating Silicon Valley’s deep-pocketed players, European tech companies are proceeding, mirroring Zennström’s optimistic views.

The worries of European investors will remain an obstacle, but it’s the willingness of European AI startups that will help the region stand tall and face competition from the US.

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