Europes Focus Should Be on Applied AI, Not Data Centers

Europe does not require a surge of new data centers to compete in the field of artificial intelligence. This statement was made by Christian Klein, CEO of SAP SE, one of the largest companies in the region, as reported by Bloomberg.

«Do we really need to build five data centers packed with powerful chips? Does Europe really need this? I have my doubts,» he remarked.

Klein explained that large language models, which demand enormous computational resources and energy during training, are becoming mainstream products.

«DeepSeek has proven this,» he pointed out.

Instead of establishing new data centers, European companies should focus on the practical application of AI to enhance their business efficiency.

Europe is lagging behind the US in AI infrastructure. In January, a consortium of American firms united under the Stargate project to invest $500 billion into the sector. In response, the EU launched the InvestAI initiative aimed at attracting €200 billion to artificial intelligence, which includes a new €20 billion fund for AI gigafactories.

In July, OpenAI agreed to rent approximately 4.5 gigawatts of computing power from Oracle’s data centers as part of the Stargate initiative. This amount of energy is sufficient to electrify millions of homes, with 1 gigawatt being equivalent to the output of a nuclear reactor.

To meet the demands of ChatGPT’s creator, Oracle, alongside its partners, will develop several data centers throughout the United States.

Nvidia’s CEO Jensen Huang visited the EU in June and stated that the region suffers from a shortage of computing capacity. He announced a series of partnerships aimed at deploying thousands of the company’s chips.

In Klein’s view, attempting to catch up with the US is a waste of resources. Though in January, at the World Economic Forum in Davos, the CEO of SAP SE stated that the Stargate project is «a great example for Europe» and expressed «absolute support» for a European version of the initiative.

On August 1, 2024, the EU’s Artificial Intelligence Act came into effect. Its main provisions will start to apply on August 2, 2026, with integration occurring gradually until then.

European companies, including ASML Holding NV, Airbus SE, and Mistral AI, have called on the EU to suspend the initiative for two years, claiming it jeopardizes the continent’s ambitions in AI.

More than 45 organizations signed the letter. Business leaders urged European Commission President Ursula von der Leyen to delay the implementation of rules that restrict the most powerful models.

«This delay, combined with a focus on the quality of regulation over its speed, will send a strong signal to innovators and investors worldwide that Europe is truly committed to simplifying rules and enhancing its competitiveness,» the letter stated.

Among the other signatories were Mercedes-Benz Group AG, BNP Paribas, Deutsche Lufthansa, Publicis Groupe SA, Prosus NV, and Siemens Energy AG.

Firms have expressed concerns that the European Commission has not provided essential guidelines and standards, including a code of practice that should offer instructions for advanced AI companies on compliance with the new regulation.

The document was initiated by a group called the EU AI Champions Initiative, led by the American venture capital firm General Catalyst, which is actively investing in Europe.

Notably, SAP SE and another major European tech firm, Spotify Technology SA, are not among the signatories.

It is worth recalling that in June 2024, Apple postponed the launch of Apple Intelligence in the EU due to «regulatory uncertainty.»