Sour grapes
Europe is losing economic weight while others build the technology we increasingly depend on. We still have considerable ambitions to tell the builders what to do. That is a difficult position to sustain.
Private investment in generative AI · 2025
On 21 September, a group of world leaders called for tighter control over the most advanced AI models. Several European heads of government signed, along with the president of the European Commission. The United States and China did not. This is a little inconvenient, since they are where most of the models are made.
The initiative came from Norway and Finland. It calls for mandatory testing and independent evaluation, and asks whether the world needs an international institution to set standards and verify that they are met. Norway's prime minister, Jonas Gahr Støre, said development had to proceed at a pace that allowed us to remain in control. There is something familiar about this, involving a fox and some grapes he could not reach.
For a continent that once built much of what the rest of the world needed, we Europeans have become surprisingly comfortable telling others how to behave. Whenever another technological leap comes from America or China, we can discuss its risks. Those who made the leap must be held accountable. Those of us who stayed behind can take responsibility for holding them to account.
The temptation is to turn falling behind into evidence that we have understood something the others have missed. But there is quite a lot we would then have to learn to live with.
Share of world GDP · 2007–2025
In 2007, the economies of today's 27 EU member states were, together, roughly the size of the American economy. Each accounted for about a quarter of the world's output, measured in current US dollars. By 2025, the EU's share was down to 18 per cent. America's was 26.
For a long time, we could explain Europe's shrinking share by pointing out that the rest of the world was getting richer. It is good that more people can afford a better life. But Americans live on the same planet. They too have to share the world economy with a growing Asia, yet their share has risen since 2007 while ours has fallen sharply.
The problem is there in what we produce per hour of work, too. In 2024, productivity in the EU was only three quarters of the American level, even after adjusting for differences in purchasing power. That is a fairly concrete difficulty for politicians trying to pay for care homes and defence, before getting to the other promises they have already made. What we can distribute depends on what we can produce. The arithmetic gets harder when the companies earning the new revenues are increasingly somewhere else.
Take generative AI, the software that produces things such as text or images on request. Its developers are trying to build tools that other businesses will use throughout their operations. Those who succeed can find customers far beyond their home country. Before those customers arrive, someone has to pay researchers and engineers to keep trying things on computers that are very expensive to run.
In 2025, almost $164 billion in private investment went into American generative AI companies. Europe received a little over $3 billion. For every dollar Europeans raised, Americans raised 51.
Revenue can fund the next model
That money pays the people doing the inventing, and the electricity bill while they work. A company that can afford to train another model can learn from the previous one and try again. A company that runs out of money first has to find someone willing to pay, while its competitor carries on.
A breakthrough then has to reach customers. The machines must be ready as usage grows, and the product has to work well enough for another business to build its operations around it. An early lead can bring in revenue to pay for the next attempt. Over time, a difference between two budgets becomes a difference between the industries growing around them.
The results are visible. In a count of notable AI models released in 2025, the United States accounted for 59 and China for 35. Europe produced two. France's Mistral, an AI developer, was for a while the company on which Europe pinned its hopes. In December 2023, its Mixtral 8×7B Instruct model led the open-model rankings in Chatbot Arena, where users compare answers without knowing which company produced them. These are models users can download and run on their own machines. On the equivalent list in September 2026, the company's best-placed model, Mistral Medium 3.5, was 29th. Of the models ahead of it, 25 came from Chinese developers.
Notable AI models · 2025
We could, of course, settle for being good customers. When a business moves its operations to the cloud, it rents computing power and storage from a supplier. Gradually, it adapts its systems to the supplier's tools. Staff learn to use them, and services for customers are built around them. Changing supplier becomes a project with costs and risks that nobody particularly wants to take on in the middle of an ordinary working week.
The business now depends on decisions about prices and products made elsewhere. The cost of getting out comes with it into negotiations over next year's contract. In Europe's own market for cloud infrastructure, European suppliers had about 15 per cent of revenue in 2025. Amazon, Microsoft and Google together had 70 per cent.
European suppliers had 29 per cent in 2017. By 2024, the market had grown sixfold, with most of the additional business going to others. We supplied the customers, whose payments give the large American providers more money to develop the next products.
Europe’s cloud infrastructure market
The servers can be in Europe even when the supplier is American. Yet Europe also has few of the largest concentrations of physical capacity. Of the world's 20 biggest locations for the largest cloud and internet companies' data centres at the end of the first quarter of 2026, 15 were in the United States. Europe had one: Dublin.
“Cloud” is a remarkably successful word for making us forget what this takes. Somewhere on the ground, someone must secure electricity and build a facility full of machines before a single request can be answered. Renting those machines does not make the need for them go away.
The 20 largest data-centre markets · Q1 2026
It is tempting to console ourselves that this is the digital economy. Europe's strength is industry, after all. We make things, though factories elsewhere are getting better at making them too. In 2025, new industrial robot installations rose by 20 per cent in China and 12 per cent in the United States. In the EU, they fell by 11 per cent.
A robot on a factory floor is an investment in what that factory will be able to deliver. It can reduce the hours of labour needed for each item and allow production to continue through the night. Eventually, the difference shows up in the price offered to a customer. A European factory has to compete with what others can deliver now, even if the machinery it bought a few years ago still works perfectly well.
New industrial robot installations · 2025
Batteries have provided an expensive lesson. A battery is a large part of an electric car's cost, and therefore of the manufacturer's ability to offer a price we will accept. In 2022, average battery pack prices in Europe were a third higher than in China. By 2025, the European price was more than 50 per cent above the Chinese price.
These are prices paid in the two markets, including imports, for packs used in electric vehicles and stationary storage. The gap widened while Europe was trying to build a battery industry of its own. At the end of 2025, China had more than 80 per cent of the world's capacity to manufacture lithium-ion batteries. The EU had roughly six to seven per cent. Anyone building the next European factory has to compete with producers who have already had practice on a very different scale.
Europe’s battery price premium
A factory becomes competitive by getting production to work and learning how to bring its costs down. It needs production to learn from. Space offers another comparison of who gets to do this repeatedly. In 2025, American providers made 180 launch attempts; Chinese providers made 93. European providers made eight over the entire year.
These are the rockets needed to launch satellites for communications and observation of the Earth. Mastering the technology means getting a rocket off the ground reliably enough that others can plan around the service. More launches give providers more experience. Europe needs those services but accounts for very little of the activity.
Launch attempts · 2025
And then there is ASML, the Dutch company that makes machines used to draw microscopic patterns on silicon wafers. Layer by layer, those patterns form the structures that make a computer chip work. Finer patterns allow more to be packed into the same tiny area.
Its most advanced machines use extreme ultraviolet light. To produce that light, a laser fires at tiny drops of tin, up to 50,000 times a second. Mirrors direct the light onwards. Air would absorb it, so the whole process has to take place in a vacuum. And it has to work repeatedly, with enough precision for customers to mass-produce chips.
ASML chipmaking equipment sales · Q2 2026
We are allowed to feel a little proud that anything so extraordinary is possible, and that the company which made it work is European. Then look at where the machines go. In ASML's geographical breakdown of system sales for the second quarter of 2026, Europe does not appear. South Korea and Taiwan account for nearly three quarters. The rest is divided between China, the United States and Japan.
Our European success supplies the machines other countries use to build their industries. It is an excellent business for ASML, and it gives us an example of how to acquire real influence. Anyone who needs those machines has to deal with the people who can deliver them. That position comes from being able to do something others cannot.
If more European companies are to have that chance, we should start with the obstacles they encounter at home. In the European Investment Bank's 2025 survey, 62 per cent of EU exporters said their main product had to meet different requirements in different EU countries. A European founder is told to compete with Americans who can grow across an enormous home market, while she spends time working out how to sell in the country next door.
We have the political capacity to discuss a new world institution for artificial intelligence. Getting our own market to work as one market is still proving difficult. And this is where the consolation becomes particularly seductive, because there is a school of thought that makes the ambition to grow the problem in the first place.
A conference and a six-year research grant
Under the name degrowth, its advocates argue for a planned reduction in material production and consumption in rich countries. The intention is to live well within ecological limits by consuming less and distributing resources differently. In May 2023, 20 members of the European Parliament co-organised a three-day Beyond Growth conference. Around the same time, a research project began with almost €10 million in EU funding over six years to develop policies for societies without economic growth.
The movement has found a place in the rooms where future policy is discussed. Its message must be comforting to a continent that keeps losing ground: perhaps the people who are growing have misunderstood. Perhaps those of us falling behind have actually got furthest. The fox's explanation of the grapes is becoming a view of the world.
Cutting emissions requires new power stations and grids. It also requires better batteries that factories can make at prices the world can afford. If those things are made elsewhere, our need for them does not disappear. We buy them from abroad. Giving up the ability to produce them leaves us dependent on whoever carries on building.
That dependence means the choices we make about growth have consequences well beyond next year's budget. Those who control the technology have a say in what the rest of us can do with it. With several suppliers to choose from, we can make demands and go elsewhere if the answer is no. When nobody can replace the supplier we depend on, the negotiation changes.
For years, the EU has been able to get others to follow its rules because companies want access to European customers. An international company may find it easier to adapt its whole product to European requirements than to make one version for us and another for everyone else. A European rule can then take effect far beyond Europe.
How market size extends a rule’s reach
This is known as the Brussels effect. It depends on how much companies stand to earn by selling to us. However carefully a rule has been drafted, a company still has to find it worth meeting the requirements to reach our market.
As our relative economic weight declines, others have more reason to put us further down their list. A supplier can delay a European launch or decide that adapting the product costs more than the market is worth. The more we need the product, the more expensive it becomes for us to insist. Exercising regulatory power then starts to impose a cost on those who thought they held it.
Remaining in control should mean having alternatives when American suppliers change their terms. It should also mean that European companies can develop the technology further, so that other countries need something we can actually supply. That requires companies to be able to build and grow here. Otherwise, we risk confusing our right to issue an appeal with our ability to persuade the world to follow it.
Primary recordsChecked 29 September 2026
- A call for control of frontier AI models
- International call for enhanced control of AI development
- GDP in current US dollars
- OECD Compendium of Productivity Indicators 2026
- AI Index 2026: Economy
- AI Index 2026: Research and development
- Mixtral of Experts
- Arena text leaderboard: open models
- European Cloud Providers’ Local Market Share Now Holds Steady at 15%
- US Rises Again as Synergy Updates Its Ranking of Hyperscale Data Center Locations
- Five Million Robots Now Operate in Factories Globally
- World Robotics 2026: EU-27
- Global EV Outlook 2026: Electric vehicle batteries
- Launch Data 2025
- EUV lithography systems
- Q2 2026 investor presentation
- EIB Investment Survey 2025: European Union overview
- Beyond Growth 2023
- A Post Growth Deal
- The Brussels Effect