France and Britain are battling it out for Europe’s AI crown

LONDON — Two countries are jockeying for position as Europe’s capital for artificial intelligence.

Both French President Emmanuel Macron and British Prime Minister Rishi Sunak have made bold statements about AI in recent weeks, as each tries to claim a stake in the highly hyped market.

“I think we are number one [in AI] in continental Europe, and we have to accelerate,” Macron told CNBC’s Karen Tso at France’s annual tech conference Viva Tech on June 18, while Sunak pitched the U.K. as the “geographical home of global AI safety regulation” at the London Tech Week conference on June 12.

AI is seen as revolutionary and therefore of strategic importance to governments around the world.

Hype around the technology has been partly sparked by the viral nature of Microsoft-backed OpenAI’s ChatGPT. It has also been the source of tech tensions between the U.S. and China as countries around the world try to harness the potential of the most critical technologies.

So, who is leading the race to take Europe’s AI crown?

At VivaTech in Paris, Macron announced 500 million euros ($562 million) in new funding to create new AI “champions.” This comes on top of previous commitments from the government, including a promise to pump 1.5 billion euros into artificial intelligence before 2022, in an attempt to catch up with the U.S. and Chinese markets.

“We will invest like crazy on training and research,” Macron told CNBC, adding that France is well-positioned in AI due to its access to talent and startups forming around the technology.

In March, the U.K. government pledged £1 billion ($1.3 billion) to supercomputing and AI research, as it looks to become a “science and technology superpower.”

As part of the strategy, the government said it wanted to spend around £900 million on building an “exascale” computer capable of building its own “BritGPT,” which would rival OpenAI’s generative AI chatbot.

However, some officials have criticized the funding pledge, saying it’s not enough to help the U.K. compete with titans like the U.S. and China.

“It sounds great but it’s nowhere near where we need to be,” Sajid Javid, a former government minister in ex-PM Boris Johnson’s cabinet, said in a fireside discussion at London Tech Week.

The European Union has its AI Act, which is set to be the first comprehensive set of laws focusing on artificial intelligence in the West. The legislation was approved by lawmakers in the European Parliament in June.

It assesses different applications of AI based on risk — for example, real-time biometric identification and social scoring systems are considered as posing “unacceptable risk,” and are therefore banned under the regulation.

France will be under direct jurisdiction of the AI Act, and it would be “unsurprising” if the relevant French regulator, either the CNIL or a new, AI-specific regulator, took an “aggressive approach” to its enforcement, according to Minesh Tanna, global AI lead at international law firm Simmons & Simmons.

In the U.K., rather than issue AI-specific laws, the government launched a white paper advising various industry regulators on how they should enforce existing rules on their respective sectors. The white paper takes a principles-based approach to regulating AI.

The government has touted the framework as a “flexible” approach to regulation, which Tanna described as more “pro-innovation” than the French method.

“The UK’s approach is driven, in a post-Brexit world, by a desire to encourage AI investment,” he added, which gives the U.K. more “freedom and flexibility to pitch regulation at the appropriate level to encourage investment,” he said in an email to CNBC.

In contrast the EU’s AI Act could make France “less attractive” for investment in artificial intelligence given that it lays down “a burdensome regulatory regime” for AI, Tanna said.

At the same time, London has been the source of a lot of doom and gloom from some corners of the industry, who’ve criticized the country for being an unattractive place for tech entrepreneurs.

Keir Starmer, the leader of the opposition Labour party, told attendees at London Tech Week that a series of political crises in the country has dented investor sentiment on tech generally.

“Many investors say to me we are not investing in the U.K. right now because we don’t see the conditions of certainty politically that we need in order to invest,” Starmer said.

Claire Trachet, CFO of French tech startup YesWeHack, said the U.K. and France both have potential to challenge the dominance of U.S. AI giants — but it’s just as much about collaboration across Europe as it is competition between different hubs.

“It would require a concerted and collective effort of European tech superpowers,” she said. “To truly make a meaningful impact, they must leverage their collective resources, foster collaboration, and invest in nurturing a robust ecosystem.”

“Combining strengths — particularly with Germany’s involvement — could allow them to create a compelling alternative in the next 10-15 years that disrupts the AI landscape, but again, this would require a heavily strategic vision and collaborative approach,” Trachet added.