Let’s talk about European competitiveness

Europe’s AI Renaissance: Charting a Course for Innovation and Competitiveness

Cate Lawrence of Tech.eu welcomed Mr. Stefan Schaible, CEO of Roland Berger, to discuss European competitiveness. Mr. Schaible highlighted Roland Berger’s unique European origin. He noted Europe’s difficult competitive position, having significantly lagged the US in productivity growth over two decades. Europe is also perceived as overly bureaucratic, lacking creativity, and not leading in AI.

Mr. Schaible contrasted Europe’s regulatory tendencies with the US’s privatized data and Asia’s state-driven systems. He argued that Europe’s extensive digital and AI regulations, often aimed at creating a “better human being,” stifle creativity and freedom. He predicted that mounting pressure would force a redefinition of many existing regulations within three years.

While acknowledging GDPR’s vital role in protecting individual rights, Mr. Schaible suggested its implementation was too rigid, hindering data flow for innovation. He noted that Europe’s standards are too high for pragmatic innovation, yet not tough enough to serve as effective entry barriers for global competitors.

The recent AWS outage highlighted the critical need for European digital sovereignty, including its own data centers and compute power, essential for defense. Mr. Schaible proposed a “European AI Airbus.” He identified a unique AI opportunity: as large language models (LLMs) face stagnation due to limited new content, Europe’s abundant high-quality data could enable it to leapfrog technologically if acted upon swiftly.

Mr. Schaible asserted that business, not just governments, must drive innovation. He urged European companies to protect their proprietary data, which constitutes their unique selling proposition, rather than freely sharing it with large LLMs. Safeguarding “the DNA of data setup” is crucial for innovating Europe’s industrial and service sectors.

Unlike past tech cycles, AI presents a distinct dynamic where large conglomerates actively collaborate with innovators to prevent disruption. Mr. Schaible believes this creates a more equitable playing field. He highlighted Europe’s potential strengths in industrial B2B, health, public sector, and financial services, leveraging its strong productive base and high-quality data.

For startups, Mr. Schaible underscored the importance of rapid innovation. He observed a positive trend of increasing private equity investment in Europe, driven by a desire for portfolio diversification and Europe’s highly qualified workforce. This, combined with a growing spirit of change, fosters an encouraging environment for new ventures. He expressed strong optimism that Europeans have recognized the “alarm bells,” leading to an explosion of innovation and startup activity across the continent.