EU can compete with US AI giants, says Brussels’ frontier-model champion

Good morning. Today, the EU’s homegrown frontier AI champion tells our tech correspondent that Europe can still compete with global rivals, and our finance correspondent reports on research suggesting the bloc’s short selling rules are counter-productive.

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Home advantage

Europe should not give up on cutting-edge artificial intelligence, the head of the company chosen to lead the European Commission’s effort to build a homegrown frontier AI model tells Barbara Moens.

Context: While much of Brussels’ focus has shifted to the application of AI across the European economy, there are concerns that Europe is falling irreversibly behind American companies such as OpenAI, Google and Anthropic in the race to develop the most advanced AI models.

European policymakers are thus trying to foster homegrown AI companies to increase the bloc’s competitiveness and reduce reliance on American technology.

Uljan Sharka, founder and chief executive of Italian company Domyn, believes Europe still has a chance to compete at the technological frontier. His company is leading the so-called Europa consortium to build an open-source frontier artificial intelligence model as part of the Commission’s Apply AI strategy.

“From a technology perspective, Europe has all the means and opportunities to actually build its own proposition in the market. There are no limits for Europe,” Sharka told the FT. “The only limit is Europe itself in the sense that Europe is not investing enough.”

Domyn has already begun training the model using European supercomputing infrastructure and expects to release it ahead of its one-year deadline in June.

Sharka argued Europe has made significant progress in building the computing infrastructure needed to train advanced AI models, while its linguistic diversity and industrial expertise provided a competitive advantage over other parts of the world regarding the data input for AI models.

He warned against focusing exclusively on AI applications in Europe while relying on foreign companies to provide the underlying technology.

“We can have the best factories in the world, but if you don’t have enough electricity, you’re not going to produce anything with those factories,” he said. “If we build only software, we’re going to have great products, but then someone can cut off electricity and then all of that is all of a sudden useless. This is why we need to have the models and they need to be open for everyone to be able to control their future.”

He urged European companies to buy more homegrown technology, as European executives often prefer established Silicon Valley suppliers over younger domestic rivals.

“The technical decision makers are still risk averse,” Sharka said, arguing that the shift of that private sector money will be key to making the European technology sector grow: “That is the real bottleneck.”

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Sold short

EU short selling rules distort share prices and inhibit the fair operation of markets, according to a new report seen by Paola Tamma.

Context: EU rules dating back to 2012 require investors to publicly disclose net short positions — bets on falling share prices — above 0.5 per cent of a company’s share capital, and confidentially report positions above 0.1 per cent to regulators.

Introduced after the financial and Eurozone debt crises, the rules aimed to increase oversight of speculation without banning short selling.

But a study by Copenhagen Economics commissioned by the Managed Funds Association, a fund managers’ trade body, argues that naming short sellers encourages copycat trading and increases volatility, undermining the rules’ original purpose.

It found that public disclosures were associated with a 2.9 per cent increase in daily share-price volatility. Investors were also 2.4 times more responsive to publicly disclosed short positions than to private ones, suggesting disclosure encourages copycat trades.

“Disclosure lets rivals free ride on the research behind it,” the authors said, calling for the EU to publish only aggregate positions.

The UK abolished public identification of short sellers in July, replacing it with anonymised aggregate disclosures while retaining confidential regulatory reporting. The US, Canada and Australia also publish aggregate data without identifying individual investors.

A spokesperson for the Commission said in a statement that the existing regulation “has functioned as expected, even during periods of market stress”, and that “there is no evidence that the current framework has reduced market efficiency.”

“Consequently, there are currently no plans to review the regulation, given that it is performing as expected,” the spokesperson said, adding: “The Commission, as always, continues to monitor these markets.”

What to watch today

1. EU and Canadian leaders meet in Montreal.
2. EU energy ministers meet in Luxembourg.
3. Hungarian Prime Minister Péter Magyar visits Czech Prime Minister Andrej Babiš in Prague.

EU and Canadian leaders meet in Montreal.

EU energy ministers meet in Luxembourg.

Hungarian Prime Minister Péter Magyar visits Czech Prime Minister Andrej Babiš in Prague.

Now read these

• Fractured continent: The EU is struggling to make its way in an increasingly hostile world. Two new books urge Europeans to have hope.
• Friendly relations: North Korean labourers are being sent to work in factories across Russia’s agricultural and manufacturing heartlands.
• Out of office: Debt woes are throttling Europe’s commercial property market, with transactions sliding to their lowest level since 2009.

Fractured continent: The EU is struggling to make its way in an increasingly hostile world. Two new books urge Europeans to have hope.

Friendly relations: North Korean labourers are being sent to work in factories across Russia’s agricultural and manufacturing heartlands.

Out of office: Debt woes are throttling Europe’s commercial property market, with transactions sliding to their lowest level since 2009.

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