Europe must heed US AI warning shot, build own capabilities and leverage

The US government's order for AI company Anthropic to block non-Americans from accessing its advanced models, Fable 5 and Mythos 5, represents a significant geopolitical move. This marks the first instance of a government compelling the withdrawal of a publicly released frontier artificial intelligence model.

Europe must interpret this action as a critical warning shot amid a period of intense technological change and geopolitical shifts. The continent faces a fundamental transformation in how people live, driven by AI advancements. Instead of succumbing to protectionism or resignation, Europe needs to pursue an ambitious political agenda.

This agenda should prioritize creating market conditions for domestic AI labs to thrive, starting with capital market reforms to unlock substantial funding. Mobilizing pension funds in major European economies is also crucial. However, developing frontier models is a long-term endeavor that may not guarantee success. Therefore, Europe must simultaneously support homegrown AI efforts and secure access to existing frontier AI systems.

To achieve this, Europe needs to negotiate access and build bargaining power. Three urgent policy steps are proposed: First, forming a coalition of AI middle powers to enhance collective leverage. Countries like the Netherlands (ASML), South Korea (high-bandwidth memory), Japan (semiconductor equipment), Canada, France, Norway (energy), Germany (industrial data), and Britain (talent and security expertise) possess unique strengths. Acting together, these nations can create a stronger negotiating position.

Second, Europe must increase its share of global AI compute, currently a mere 5% compared to America's over 75%. Ambitious reforms should aim for a 20% share within five years, requiring dedicated economic zones, streamlined data center permitting, and increased energy generation. This necessitates a concept of "sovereignty-as-interdependence," acknowledging that European firms cannot achieve this scale alone due to capital and chip supply constraints. Governments should incentivize US firms to build AI facilities in Europe in exchange for robust frontier AI access.