The EU plans a new AI strategy to cut its reliance on US and Chinese technology

The European Union is launching a new "Apply AI Strategy," backed by €1 billion in funding, to bolster its digital independence and reduce reliance on US and Chinese AI infrastructure. The initiative aims to integrate AI as a strategic asset across critical sectors like healthcare, defense, and industry by supporting European-developed, open-source generative AI solutions and leveraging public agency demand. This strategic pivot is driven by concerns over geopolitical dependencies and the potential weaponization of external AI technologies, signaling a significant push for European AI autonomy and strategic investment in critical capabilities.

Analysis

Brussels is preparing to launch a new AI strategy aimed at strengthening Europe's digital independence and reducing its reliance on the US and China. According to a Financial Times report, the "Apply AI Strategy" is designed to build up European AI platforms and speed up their adoption in sectors like healthcare, defense, and industry. The plan, set to be announced Tuesday by EU Commissioner for Technological Sovereignty Henna Virkkunen, frames artificial intelligence as more than just a productivity tool. The EU wants AI to become a "strategic asset" deeply integrated into its institutions, industry, and security policy. A key part of the strategy is supporting scalable, reusable generative AI solutions developed in Europe, with a focus on open source. The EU plans to use demand from public agencies to drive broader adoption of these technologies and help European startups grow. To fund the program, the European Commission is allocating 1 billion euros from existing funding. The initiative also aims to accelerate AI adoption in sensitive areas like healthcare and manufacturing. Building Europe's AI autonomy Another top priority is cutting "external dependencies of the AI stack"—that is, Europe's current reliance on outside tech infrastructure for operating, training, and managing AI systems. The Commission warns that these dependencies "can be weaponized" by state and non-state actors, posing risks to supply chains. Geopolitical tensions are fueling these concerns. Donald Trump's return to the US presidency has renewed doubts in Europe about the reliability of the US as a partner, while China's growing influence in AI is seen as a threat to Europe's ability to shape the technology's future. Defense is another focus. European militaries still rely heavily on US technology for AI-driven command and control (C2) systems in NATO operations. The Commission wants to "accelerate the development and deployment of European AI-enabled" C2 capabilities and specifically promote "sovereign frontier models" for AI in areas like space defense. The European Union is launching an "Apply AI Strategy" backed by €1 billion in funding, signaling a significant strategic pivot towards achieving digital sovereignty and reducing its technological dependence on the US and China. This policy frames AI not merely as a commercial tool but as a "strategic asset" for security and industry, with a focus on developing sovereign, open-source generative AI solutions. By leveraging public agency procurement, the EU aims to create a protected market to scale up European AI startups and accelerate adoption in sensitive sectors like healthcare, defense, and manufacturing. The initiative is explicitly driven by geopolitical concerns, including the potential "weaponization" of external AI dependencies and doubts about the reliability of international partners. A key objective is to reduce reliance on US technology for military command and control (C2) systems, underscoring the deep integration of this AI strategy with Europe's broader security and defense policy.

Key Decisions for Investors

• Investors should identify European technology firms, particularly those specializing in open-source generative AI for the defense, healthcare, and industrial sectors, as they are positioned to be direct beneficiaries of the €1 billion funding and preferential public procurement.
• Re-evaluate long-term growth prospects for dominant US and Chinese AI platform providers in Europe, as this strategy signals increasing regulatory friction and market access risk within government and critical infrastructure contracts.
• Consider thematic exposure to European companies poised to lead the AI-driven modernization of the continent's defense and industrial base, which now has clear, long-term policy and fiscal support.
• Monitor the execution of the strategy and the competitive development of European AI models, as the initiative's success is contingent on creating technologically viable alternatives to established non-EU platforms.