LONDON — As governments around the world scramble to stay ahead in the frantic world of artificial intelligence, the U.K. is betting big on the next computing breakthrough: quantum. A national research program dating back over a decade has made the U.K. a leader in harnessing the properties of quantum physics to build computers capable of carrying out calculations in a fraction of the time taken by conventional machines. The program has given birth to several leading startups attempting to turn experimental efforts into large-scale, reliable computers that could give their owners an immense economic and national security advantage. Winning that race is a top priority for No. 10 Downing Street, which has identified quantum as one of six frontier technologies crucial to “U.K. security and sovereignty.” In a sign of its importance, Britain’s quantum prowess formed a central plank of the country’s technology partnership with the U.S. U.K. officials pointed to the industry as proof that the deal was not one-sided. Now, the government is preparing to significantly increase support for a small number of the most promising quantum startups, after Technology Secretary Liz Kendall said the U.K. must do “fewer things better.” According to six people familiar with discussions, the government plans to dedicate the bulk of a £670 million commitment for quantum computing to just a handful of startups, with payments tied to reaching certain technical milestones. Prime Minister Keir Starmer is expected to announce the plan early in the new year, two of the people said, though both cautioned that plans remain subject to change. “We are determined to unlock quantum’s benefits for society and the economy,” a spokesperson for the Department for Science, Innovation and Technology said, noting that the U.K. had backed “one of the largest commitments made to this technology of any government in the world.”  BIGGER BETS The U.K.’s early recognition of quantum’s potential has seen it capture 18 percent of global funding in the sector since 2020, according to a study by the Royal Academy of Engineering.  But there are fears that its lead could slip, with the U.S., China, Canada, Denmark, France and Germany all investing heavily, and some U.K. startups saying they are forced to look abroad to raise enough capital. A $1.1 billion takeover of leading British startup Oxford Ionics by U.S. rival IonQ this summer has only sharpened concerns, although the company plans to retain the U.K. as its R&D hub.  Winning that race is a top priority for No. 10 Downing Street, which has identified quantum as one of six frontier technologies crucial to “U.K. security and sovereignty.” | Mark Kerrison/Getty Images Jakob Mökander, director of science and technology policy at the Tony Blair Institute and co-author of a report warning that the U.K. risked squandering its lead in quantum, said: “Now is the time to make bets on promising startups that can grow into national champions.”  That’s been the key message in discussions between the sector and government officials on next steps, according to the people above.  “It is crunch time for quantum computing in the U.K. right now,” said Sebastian Weidt, founder of Universal Quantum.  Despite being based in the south of England, Weidt said the company has received more support from overseas, including a €67 million contract in Germany. France has also awarded €500 million to just five startups.  In contrast, Weidt said the U.K. has failed to move beyond small grants, arguing it needs to become a better customer of its “sovereign” companies or risk ceding “the great quantum computing foundations the U.K. has built over decades … to foreign players.”  “We need to see now more ambition, and we need to see more pace,” Gerald Mullally, CEO of Oxford Quantum Circuits, said, stressing that the U.K. must “act at a level of scale that is competitive relative to what we’re seeing in other nations.” LESS IS MORE Quantum computing is precisely the type of “critical sector where the U.K. has a global competitive edge” that the government should be getting behind, Ed Bussey, CEO of Oxford Science Enterprises, which backs university spin-outs, said. The industry now expects the government to put money where its mouth is, the people cited above said, with one suggesting a handful of companies could get up to £50 million each under the initiative. Procurement and government investment could also be forthcoming.  In recent weeks, the government committed to “leverage its procurement budgets to drive innovation,” including to “act as an early buyer for the best new technologies to de-risk investment, create demand, and pave the way to market.” As part of a “strategic reset,” the U.K.’s research and development funding agency UKRI will also become more “choiceful” in allocating £7 billion for scale-ups over the next four years to companies in areas where the U.K. has genuine international advantage, its CEO Ian Chapman has said. In a new five-year strategy, the British Business Bank also vowed to increase investment and take on greater risk “to support the most strategically important scale-up companies to stay in the U.K.”

BRUSSELS — The EU has struck a political agreement to overhaul the bloc’s foreign direct investment screening rules, the Council of the EU announced on Thursday, in a move to prevent strategic technology and critical infrastructure from falling into the hands of hostile powers. The updated rules — the first major plank of European Commission President’s Ursula von der Leyen’s economic security strategy — would require all EU countries to systematically monitor investments and further harmonize the way those are screened within the bloc. The agreement comes just over a week after Brussels unveiled a new economic security package. Under the new rules, EU countries would be required to screen investments in dual-use items and military equipment; technologies like artificial intelligence, quantum technologies and semiconductors; raw materials; energy, transport and digital infrastructure; and election infrastructure, such as voting systems and databases. As previously reported by POLITICO, foreign entities investing into specific financial services must also be subject to screening by EU capitals. “We achieved a balanced and proportionate framework, focused on the most sensitive technologies and infrastructures, respectful of national prerogatives and efficient for authorities and businesses alike,” said Morten Bødskov, Denmark’s minister for industry, business and financial affairs. It took three round of political talks between the three institutions to seal the update, which was a key priority for the Danish Presidency of the Council of the EU. One contentious question was which technologies and sectors should be subject to mandatory screening. Another was how capitals and the European Commission should coordinate — and who gets the final say — when a deal raises red flags. Despite a request from the European Parliament, the Commission will not get the authority to arbitrate disputes between EU countries on specific investment cases. Screening decisions will remain firmly in the purview of national governments. “We’re making progress. The result of our negotiations clearly strengthens the EU’s security while also making life easier for investors by harmonising the Member States’ screening mechanism,” said the lead lawmaker on the file, French S&D Raphaël Glucksmann. “Yet more remains to be done to ensure that investments bring real added value to the EU, so that our market does not become a playground for foreign companies exploiting our dependence on their technology. The Commission has committed to take an initiative; it must now act quickly,” he said in a statement to POLITICO. This story has been updated.

BRUSSELS — The European Commission is in talks with eight of Europe’s top investors to involve them in a fund to support homegrown companies working on critical technologies. Representatives from the private investors are in Brussels on Tuesday to discuss their involvement, according to a planning note seen by POLITICO. The fund has been in the works since the spring and will combine EU money with private investment to fill a late-stage financing gap for European tech startups — buying stakes to support companies ranging from artificial intelligence to quantum. It could range from €3 billion to €5 billion, depending on how much investors contribute. The investors invited to meet with the Commission on Tuesday are Danish investment company Novo Holdings, the Export and Investment Fund of Denmark, Spanish CriteriaCaixa and Santander, Italian Intesa Sanpaolo, Dutch pension fund APG Asset Management, Swedish Wallenberg Investments, and Polish Development Bank Gospodarstwa Krajowego, according to the planning note. The fund will focus on “strategic and enabling technologies,” the note read, including advanced materials, clean energy, artificial intelligence, semiconductors, quantum technology, robotics, space and medical technologies. The Commission is seeking to address the issue of companies struggling to scale in Europe. Many turn to investors from the U.S. or elsewhere for late-stage financing, after which they often relocate. The goal of the fund is to make sure that startups that have completed their early funding rounds can “secure scaleup financing while maintaining their headquarters and core activities in Europe,” the note said.  The fund follows an earlier effort to take direct equity stakes in companies through the European Innovation Council Fund. Investments under the EIC Fund are capped at €30 million, while the new fund would invest €100 million or more. The fund will launch in April. Other investors could still come in at a later date. In November, the Commission plans to begin the search for an investment adviser — a process that should be wrapped up by January, according to the planning note.

LONDON — At a couple of pages long, the technology pact the U.S. and the U.K. will sign this week when President Donald Trump lands in London will be easy to miss amid the circus of a state visit. But what will be impossible to ignore is the group of technology heavyweights joining Trump’s entourage. Nvidia boss Jensen Huang, who is hosting a party in London’s King’s Cross on Thursday night, OpenAI’s Sam Altman and Blackstone chief executive Stephen Schwarzman are among those accompanying the U.S. president. Nvidia is due to announce an investment in Britain’s biggest data center, planned for Blyth in northeast England, according to three people familiar with the plans. A subsidiary of Blackstone is leading the project and OpenAI is also involved. It is expected to be billed as a British “Stargate,” similar to a Norwegian version the companies announced in July. The tech pact Trump will agree with Prime Minister Keir Starmer has paved the way for some of that investment, the U.K. embassy in Washington believes. The document focuses on building partnerships — through R&D, procurement and skills — in AI, quantum and space, according to two people briefed on it. A U.K. government spokesperson claimed the pact would “change the lives” of Brits and Americans, while U.K. Technology Secretary Liz Kendall said: “Boosting our tech ties with the U.S. will help us deliver the change people here at home expect and deserve.” A separate agreement on nuclear energy will also come during the state visit, fast-tracking reactor design checks between the two countries. It includes plans to build data centers powered by small modular reactors at the former coal power station in Cottam, Nottinghamshire. MADE IN THE USA  Britain pitched the pact to Washington as a way for Western democracies to beat China in the technology race and set a “gold standard” in digital rulemaking. Yet while the country’s AI strategy talks about sovereignty, with only £2 billion of public money set aside to deliver it, Britain is heavily reliant on U.S. investments and technology to make it happen. Gaia Marcus, director of the Ada Lovelace Institute think tank, warned of increased U.K. reliance on America. “The public deserves to understand who really benefits from these partnerships and what the return will be for taxpayers in years to come,” she said. “We mustn’t just focus on what the figures look like today, if the cost is technological lock-in tomorrow, limiting our ability to seek alternatives in the future.”  Nvidia is due to announce an investment in Britain’s biggest data center, planned for Blyth in northeast England, according to three people familiar with the plans. | Ina Fassbender/Getty Images Chi Onwurah, chair of the House of Commons Science, Innovation and Technology Committee, said: “Whilst I’m pleased that the U.K. is an attractive place for U.S. investment, the U.K. needs to take decisions that are in its long-term strategic interest; true technology sovereignty cannot mean being dependent on one investor or country.” But Keegan McBride, senior policy advisor in emerging technology and geopolitics at the Tony Blair Institute, said the U.K. has little choice as only the U.S. or China were able to provide it with the AI infrastructure it needed to compete. “For the U.K. and for many other countries that want to access frontier AI capabilities, the United States represents the best option,” he said.  The Trump administration, meanwhile, wants to sell American AI “packages” to its allies, pitching them as a form of AI sovereignity. “We are committed to finding a way to enable America’s private companies to meet your national technological needs,” White House tech policy chief Michael Kratsios told APEC members at a conference in South Korea this August.  Another prize for U.S. tech companies is large government contracts. Britain’s defense department announced a £400 million deal with Google Cloud last week, while Nvidia, OpenAI, Anthropic and Google Cloud signed separate partnership agreements with the U.K. government earlier this year.   JUST DON’T MENTION RULES  The U.S.-U.K. tech pact is expected to avoid the thornier issue of online regulation, but it is something the White House has pressured the U.K. government on throughout trade negotiations. Starmer also faces domestic pressure from Nigel Farage, leader of the populist and poll-topping Reform UK party, who compared Britain’s free speech laws to North Korea in the U.S. Congress this month.  Starmer has repeatedly defended Britain’s Online Safety Act, including in front of Trump at his Scottish Turnberry resort in August, while Trump has also attacked the Digital Services Tax and competition regulations.  McBride said: “There is a growing number of regulatory concerns on the side of the United States, particularly regarding censorship and free speech, that could disrupt tech relations between the two countries.”    One person briefed on the agenda for Trump’s visit said: “There are three regulatory pieces that the U.S. is really concerned about in Europe right now. They’re going to be looking … to see some sort of support from the U.K.”  They listed the Digital Services Tax, which the government has repeatedly ruled out ditching, the EU’s Digital Markets Act, and the CSDD (an EU supply chain disclosure reporting standard). “There are people inside the White House that are very set on expanding the U.S.-U.K. relationship as a means to counterbalance the EU, and I think that’s a big part of this trip.” 

BRUSSELS — The European Union wants to speed up quantum computing, but cybersecurity officials warn that it comes with a gargantuan risk: an impending quantum security doomsday. The European Commission on Wednesday warned that Europe has fallen behind the United States and China in rolling out the technology, in a new quantum strategy aimed at drawing investment and turning the bloc’s know-how into an economic advantage. Quantum computing is seen as the next frontier in technology. Its capabilities surpass those of existing supercomputers, enabling it to solve problems in areas ranging from drug discovery to battery technology, as well as communications and navigation tech for defense and space. However, it also presents a big problem for cybersecurity. Modern-day digital communications, internet traffic and data collections are secured using a system called public key cryptography, which relies on complex mathematics that regular computers can’t solve. But quantum computers — which are many times more powerful than today’s computers — could crack those codes easily, experts have warned. “Everything breaks,” said Nigel Smart, a professor with the computer security and industrial cryptography department at KU Leuven, a Belgian university. “Your phone, the internet, everything breaks. Not break as in doesn’t work, breaks as in, it’s not secure.” Once quantum computers reach the inflection point, it would effectively mean that most of today’s data zooming around on internet wires would be readable to anyone tapping in. A particularly eerie problem is what’s known as “store now, decrypt later,” where threat actors — notably intelligence agencies — take data that’s encrypted with public key cryptography, retain it and then unlock it once quantum computing technology is sufficiently advanced. The challenge for European countries will be to defend themselves against these emerging threats — or else fall prey to foreign spooks, cyber crooks and hackers. The European Union warned in its quantum strategy on Wednesday that the bloc is at risk of seeing promising homegrown quantum tech firms falling into the hands of foreign players. Europe is the global leader in the number of scientific publications on the technology, but private investment has mostly gone elsewhere: Europe attracts only 5 percent of global private quantum funding, compared to over 50 percent by the U.S. and 40 percent by China, according to the EU’s calculations. The details of the strategy were first reported by POLITICO. 2030 DEADLINE In parallel with the Commission’s grand plan to speed up on quantum, European authorities have been developing guidelines to mitigate the risks of encryption being broken. Cybersecurity authorities released a roadmap last month to transition to post-quantum cryptography, a type of algorithm that could resist quantum computers. It suggested that EU countries protect critical infrastructure with post-quantum cybersecurity by the end of 2030 — a deadline first reported by POLITICO. U.S. tech giant IBM, a frontrunner in quantum tech, recently announced it expects to have the first workable quantum computer by 2029. | Angela Weiss/AFP via Getty Images The dates proposed by European cyber officials roughly aligned with those put forward by the United States, the United Kingdom and Australia. U.S. tech giant IBM, a frontrunner in quantum tech, recently announced it expects to have the first workable quantum computer by 2029. That underlines the urgency of securing critical data. “The fact that we have this roadmap now and that all of the EU member states agreed on this … I think this is really a big step,” said Stephan Ehlen, a cryptography expert at the German cybersecurity agency and one of the authors of the roadmap. But making a plan is just the start. “This is not only about these algorithms, it’s a huge migration problem … It affects billions and billions of systems,” said Bart Preneel, a cryptographer also from KU Leuven. “It’s a very complex problem that you cannot solve in a few A4s.” It’s also a problem that hits home with national governments and their security and intelligence services. Several European governments have imposed export restrictions on quantum technology; the real concern for governments is whether their own communications are affected, and whether “everything they’re doing can be exposed,” Preneel said. Some experts have downplayed a doomsday scenario for quantum, arguing that even if computers are developed that can break modern encryption, it still requires a significant amount of work and money to do so. The EU has no excuse not to push on, said Manfred Lochter, another official at the German cyber agency. “If you don’t have access to quantum technologies, then you’re lost.”

BRUSSELS — As Europe prepares to enter a new technology race, the hurdles it faces to beat out the U.S. and China are all too familiar. After rapidly falling behind in the global rush to artificial intelligence, Brussels has a fresh chance at an economic success story in the emerging field of quantum technology. But in a new strategy to be released Wednesday, the EU will warn that promising homegrown quantum tech risks being snatched up to make money abroad as the bloc continues to lag in turning research into “real-market opportunities,” according to a draft seen by POLITICO. “Europe attracts only five percent of the global private quantum funding, compared to over 50 percent captured by the U.S. and 40 percent by China,” the undated draft read. Governments and technology companies — most notably in the U.S. — are plowing billions into the quantum wave, which would be revolutionary because quantum computers would surpass the problem-solving capacities of current computers by vast orders of magnitude, revolutionizing industries from communications to drug development. Europe is the global leader in the number of scientific publications on the technology. “Europe has been falling behind [when it] comes to the technology in many sectors. This sector is something where we are several years ahead of other countries,” said Juha Vartiainen, co-founder of the Finnish quantum computing company IQM. But in the race to commercialize that research, Europe risks falling behind quickly, ranking only third in patents filed, behind the U.S. and China. To many, it’s déjà vu. Europe is generally best in class in the research that precedes revolutionary technologies, as it was in artificial intelligence. But the U.S. and China leapfrogged the continent in building the companies to deploy mass-market applications. A major point of debate is whether Europe will give its quantum industry free rein. Quantum computers are considered sensitive technology since they are expected to break the digital encryption that protects data and communications from being surveilled and stolen — making the technology a matter of national security. Several European governments have already imposed export restrictions. CASH FLOW PROBLEMS U.S. tech giant IBM recently announced it expects to have the first workable quantum computer by 2029 — adding urgency to the timeline for Europe to get its house in order. For decades, Europe has failed to overcome its fragmented financial market and pool funding on the scale that the U.S. and China can provide. Efforts to overcome the barriers to investment through a bloc-wide capital markets union have yielded no significant outcomes. U.S. tech giant IBM recently announced it expects to have the first workable quantum computer by 2029 — adding urgency to the timeline for Europe to get its house in order. | Anna Szilagyi/EPA The strategy notes significantly more investment will be needed to roll out reliable technology that is widely adopted by several industries. “Raising a scale-up in Europe is super difficult, because we lack the European instruments, the European venture capital … large enough to support that,” said Enrique Lizaso, CEO of Spanish software company Multiverse Computing, which is crossing quantum-inspired software applications with artificial intelligence. Multiverse last month raised €189 million in a funding round that included both U.S.-based and European investors. Lizaso said that if Europe wants to help scale its companies it must be prepared to invest €100 million per company, “which is what you’re going to have from the U.S.” According to IQM’s Vartiainen, “we would need to have funding levels which are significantly larger than they have been so far.” In an interview Tuesday, the EU’s tech commissioner Henna Virkkunen said that Brussels and the capitals have jointly funded quantum technology with €11 billion. “Now it’s important, because we are quite fragmented, that we are putting different dots together,” she said. PICKING WINNERS Both Brussels and EU capitals have rolled out public funding plans to complement private funding, but the industry fears these are insufficient and lack focus. Europe’s approach has been to be “technology-neutral” and fund several strands of quantum technology, Vartiainen said, but spreading out funding can dilute its impact. Europe should follow the U.S. example of unlocking larger investments for focused “challenges,” he said. Under a program led by the U.S. government’s DARPA defense research agency, 18 companies have been selected as part of a larger bid to come up with an error-free quantum computer by 2033. Those companies could reportedly tap up to $300 million if they pass all the stages. The EU’s draft strategy promises to launch “two grand challenges” between 2025 and 2027, with one focused on quantum computing and another on quantum navigation systems in “critical environments.” Another way for governments to support companies to commercialize the technology would be if they are the primary buyers of technology, which then lowers the bar for the industry to follow suit. Some industry voices have warned that the EU’s approach to regulating AI offers a cautionary tale. | Etienne Laurent/EPA The draft strategy said the Commission would “support innovation-oriented procurement schemes,” but didn’t offer much detail on how it would do so. Companies are adamant on what they don’t want from Brussels: regulation and restrictions on quantum technology, like restrictions on the export of the technology. Some industry voices have warned that the EU’s approach to regulating AI offers a cautionary tale. Worried about the potential harms of the technology, the EU rolled out the world’s first AI rulebook, only to quickly backtrack to focus on AI innovation and commercial success. “We cannot afford to regulate what is not yet mature,” said Cecilia Bonefeld-Dahl, director general of DigitalEurope, one of Brussels’ leading tech lobbies. “Otherwise, Europe risks losing the quantum race.”

The Pentagon is reviewing America’s role in a historic, multibillion-dollar pact among Washington, the United Kingdom and Australia to ward off China’s growing influence. The widely supported deal calls on the three countries to jointly develop hypersonic weapons and nuclear-powered submarines, a unique security partnership that could strengthen seapower gaps in the Pacific and produce transformative new weapons. Pentagon policy chief Elbridge Colby — who has expressed skepticism about the program’s worth — is running the review, according to two defense officials, granted anonymity to discuss internal policy talks. “This is an opportunity for the [Defense Department] to ensure the effort is in alignment with the Trump administration’s priorities,” one of the officials said. The Biden administration inked the deal, known as AUKUS, four years ago. The people did not say how the Trump administration could tweak the massive package of cooperative efforts or when officials would make a decision. But the agreement appears to have the backing of numerous lawmakers and Secretary of State Marco Rubio, who expressed support for it during his confirmation hearing. The Defense Department did not respond to a request for comment. The Financial Times first reported the review. Such assessments aren’t entirely unusual. British Prime Minister Keir Starmer initiated a review of AUKUS after his election last year. A U.K. government spokesperson, granted anonymity to discuss the situation, said the review was “understandable” and that London would continue to work closely with the U.S. and Australia on the deal. But the development was met with frustration from congressional Democrats, especially on the Eastern Seaboard, which houses some of America’s largest shipyards. Australia has committed to investing $3 billion in modernizing U.S. shipyards that produce nuclear-powered submarines, a massive influx in cash that would benefit American industry and bulk up its ability to produce submarines. New Hampshire Sen. Jeanne Shaheen, the top Democrat on the Senate Foreign Relations Committee, said news of the review “will be met with cheers in Beijing.” She added that scrapping the partnership would “further tarnish America’s reputation and raise more questions among our closest defense partners about our reliability.” Colby has challenged major parts of the AUKUS deal, including a plan for the U.S. to sell three Virginia-class submarines to Australia, citing the need for the U.S. to maintain a robust undersea presence in the Pacific. The Virginia sales would come in three-year intervals starting in 2032 and would replace the retiring Collins-class submarines in the Australian arsenal. But Colby appeared more open to the project during his Senate confirmation hearing in March. “It should be the policy of the United States government to do everything we can to make this work,” he said. Colby did note he was concerned that selling submarines to Australia, or using U.S. shipyards to help build them, could put the U.S. Navy in “a weaker position” since they weren’t going to American submarine development. The agreement would also mean closer cooperation among the three nations in building quantum computers and hypersonic weapons. And it has largely moved forward without controversy. Australian Deputy Prime Minister Richard Marles met with Defense Secretary Pete Hegseth at the Pentagon in February and pledged the first $500 million of a $3 billion investment. President Donald Trump “is very aware, supportive of AUKUS, recognizes the importance of the defense industrial base,” Hegseth said at the meeting. The three nations already have poured millions into training to operate nuclear-powered vessels. Australia has funneled even more into expanding its base in Perth on the country’s western edge. Connecticut Rep. Joe Courtney, the top Democrat on the House Armed Services seapower subcommittee, questioned why the administration would launch the review when so much is underway. “To walk away from all the sunk costs invested by our two closest allies, Australia and the United Kingdom, will have far-reaching ramifications on our trustworthiness on the global stage,” he said. “It is a direct contradiction to the administration’s ‘America first, but not alone’ goal of countering aggression from China, Russia and other adversaries.” Joe Gould and Esther Webber contributed to this report.

BRUSSELS — The EU is set to deliver a sobering message to a growing movement in Europe calling for a detox from U.S. Big Tech. The message? That ain’t happening anytime soon. As the U.S. continues to up the ante in questioning transatlantic ties, calls are growing in Europe to reduce the continent’s reliance on U.S. technology in critical areas such as cloud services, artificial intelligence and microchips, and to opt for European alternatives instead. But the European Commission is preparing on Thursday to acknowledge publicly what many have said in private: Europe is nowhere near being able to wean itself off U.S. Big Tech. In a new International Digital Strategy the EU will instead promote collaboration with the U.S., according to a draft seen by POLITICO, as well as with other tech players including China, Japan, India and South Korea. “Decoupling is unrealistic and cooperation will remain significant across the technological value chain,” the draft reads.  It’s a reality check after a year that has seen calls for a technologically sovereign Europe gain significant traction. In December the Commission appointed Finland’s Henna Virkkunen as the first-ever commissioner in charge of tech sovereignty. After few months in office, European Parliament lawmakers embarked on an effort to draft a blueprint for tech sovereignty.  Even more consequential has been the rapid rise of the so-called Eurostack movement, which advocates building out a European tech infrastructure and has brought together effective voices including competition economist Cristina Caffarra and Kai Zenner, an assistant to key European lawmaker Axel Voss. There’s wide agreement on the problem: U.S. cloud giants capture over two-thirds of the European market, the U.S. outpaces the EU in nurturing companies for artificial intelligence, and Europe’s stake in the global microchips market has crumbled to around 10 percent. Thursday’s strategy will acknowledge the U.S.’s “superior ability to innovate” and “Europe’s failure to capitalise on the digital revolution.” What’s missing are viable solutions to the complex problem of unwinding deep-rooted dependencies. The EU has embarked on a journey to catch up on AI infrastructure, earmarking billions of euros for AI-optimized supercomputers in a bid to counter U.S. plans by OpenAI and others. Yet even tech-friendly lawmakers have expressed doubts this will succeed.  Europe should “sober up” in its quest for tech sovereignty and accept that “certain trains have left the station,” conservative Bulgarian lawmaker Eva Maydell told POLITICO’s AI and Tech Summit last month. “We need to have a very clear outline plan which, first and foremost, assesses where our strengths are, where we have certain dependencies, and where we need to cooperate,” said Maydell. Europe should “sober up” in its quest for tech sovereignty and accept that “certain trains have left the station,” conservative Bulgarian lawmaker Eva Maydell told POLITICO’s AI and Tech Summit last month. | Matthias Balk/Picture Alliance via Getty Images Thursday’s strategy is expected to do just that, with a long list of opportunities to collaborate in areas such as chips, quantum technology, AI and secure connectivity.  “[The strategy] is more pragmatic than being politically absolutist … [and saying] OK, we’re going to do everything in Europe,” said Dan Nechita, former head of Cabinet of European lawmaker Dragoș Tudorache and now EU director for the Transatlantic Policy Network. He likened it to growing tomatoes or potatoes at home: “It doesn’t mean that I could not, but sometimes it doesn’t make sense.” As even some of Europe’s most Atlanticist, free-market corners grow wary of their addiction to the U.S., a few countries and cities are embarking on their own political efforts to break free. National lawmakers in The Hague have been building pressure on the Dutch government to wean off its dependence on American providers — only for their efforts to be derailed by Geert Wilders’ decision to quit the government coalition.  The Danish cities of Copenhagen and Aarhus decided on Tuesday to look for alternatives to allow them to drop Microsoft productivity products and cloud services, as Denmark prepares to take over a leading role in Brussels running meetings of EU ministers from July 1. But Thursday’s strategy acknowledges skepticism as to whether the EU actually has alternatives for these political front-runners to fall back on, or whether it makes sense to splash billions of euros on getting them off the ground. The EU’s tech chief Virkkunen has underscored the Commission’s desire to keep the bloc open to the world in her first months in office, by taking trips to India, Japan and the U.S. and consistently emphasizing the importance of dialogue and close collaboration.  She has the backing of some of the most influential tech lobby groups in town — even on the need to continue to work with the U.S.  “We need a transatlantic tech alliance to jointly develop and protect the technologies that underpin our shared security and economic prosperity such as AI, quantum and semiconductors,” Cecilia Bonefeld-Dahl, director general of DigitalEurope, told POLITICO ahead of Thursday’s unveiling.

The European Commission plans to use EU funds to buy stakes in artificial intelligence and quantum companies seeking to scale as it continues a bid to counter U.S. dominance. According to a draft strategy seen by POLITICO, the EU will create a new Scaleup Europe Fund next year that is privately managed and co-financed by private investors. The plan, set to be published Wednesday, comes amid increasingly vocal concerns about technological dependency on the U.S. and other global powers. The fund seeks to counter a “clear funding gap” that European companies experience when scaling risky, capital-intensive technologies that need investments above €100 million. The lack of scale-up capital “poses several risks for the EU,” such as the loss of companies and critical technologies domestically, according to the plan. “A European scale-up with critical mass, operating at market conditions, is needed to fill this gap and strengthen the EU’s economic security and tech sovereignty,” it reads. The draft — which contains more details on the fund than a version reported previously by POLITICO — shows the Commission is upping its efforts to invest in the bloc’s highest potential companies. The fund would allow the Commission and investors to take a direct stake in companies operating in strategic sectors such as artificial intelligence, quantum technology, clean tech, semiconductors, advanced materials and biotech. The European Commission plans to use EU funds to buy stakes in artificial intelligence and quantum companies seeking to scale as it continues a bid to counter U.S. dominance. | Ritchie Tongo/EPA The EU’s European Innovation Council has already made such investments, but only for much smaller companies that are just starting up. The Commission also wants to let startups establish their business more quickly, possibly within two days, according to the draft. The EU executive has set the goal of “easing the process of setting up and scaling companies,” it says. Therefore it will present a new regime in the first quarter of next year with “a single set of rules based on digital-by-default solutions” for setting up and scaling a company. The Commission said it would explore whether companies can establish their business “more rapidly, ideally within 48 hours.” Tech startups have long rallied against the lengthy processes of establishing their businesses, which they often have to repeat when scaling their businesses in new countries. The two-day incorporation model is one made famous by business-friendly U.S. states such as Delaware.

BRUSSELS — Europe should “sober up” in its quest for tech sovereignty and accept that “certain trains have left the station,” conservative Bulgarian lawmaker Eva Maydell told POLITICO’s AI and Tech Summit Tuesday. European institutions have been trying to foster the buildup of tech capacity in sectors ranging from artificial intelligence to cloud computing amid concerns about dependency on the United States and other global powers. “We need to have a very clear outline plan which, first and foremost, assesses where our strengths are, where we have certain dependencies, and where we need to cooperate,” said Maydell. “If we look at the priorities” of the Commission, “there is so much,” she said. The Commission is working on a wide range of initiatives from making Europe an AI Continent and the best place to grow startups, to backing quantum computing, biotech and connectivity. Maydell said the EU should “identify the few big ideas that can propel our economic and industrial base,” suggesting a focus on two or three initiatives since “less is more.” “We have limited resources. There are various priorities. For us in this room, tech is the priority. In another room down the road, defense is the priority,” she said. EU institutions should also not pick companies to champion, instead leaving it up to markets to decide which firms survive, Maydell said. Speaking on the same panel, which focused on how to build out Europe’s AI capacities, Irish independent MEP Michael McNamara stressed that most of the funds going into tech investment are still private. As well as the availability of financing, the discussion between Maydell, McNamara, Amazon’s public policy director Yohann Bernard and Bertin Martens, senior fellow at Bruegel, also cited energy prices and a lack of tech talent as limiting Europe’s progress.