Europe’s AI Future Hangs in Balance: Former Google Boss Eric Schmidt Warns of Chinese Model Dependence

Europe stands at a technological crossroads—and the wrong turn could mean ceding its AI sovereignty to Beijing. That's the stark warning from Eric Schmidt, former Google CEO, who argues that without urgent action, the continent risks becoming permanently dependent on Chinese artificial intelligence models.

The Looming Dependency Trap

It's not just about who builds the smartest chatbot. Schmidt's alarm centers on foundational models—the complex AI engines that power everything from search to scientific discovery. If Europe fails to cultivate its own competitive ecosystem, it could find itself locked into a foreign tech stack, with profound implications for economic security, data privacy, and geopolitical leverage.

A Strategic Void Waiting to Be Filled

The warning exposes a gaping hole in Europe's digital strategy. While regulations like the AI Act focus on risk management, they do little to spur the kind of moonshot investments needed to compete with state-backed Chinese tech giants and well-funded American firms. The result? A market vacuum that Beijing is all too ready to fill with cost-effective, readily available solutions.

The Stakes Beyond Code

This isn't merely a tech debate. Dependence on foreign AI models means external control over the algorithms that will shape public discourse, optimize supply chains, and drive innovation. It hands over the keys to the continent's digital future—a move as strategically sound as outsourcing your military's communication system to a rival power.

The Finance Angle: A Cynical View

Of course, from a purely financial perspective, buying cheap, capable AI from China might look like a savvy short-term cost-cutting move—the kind of quarterly-win thinking that makes consultants rich and leaves nations strategically bankrupt for decades. It's the ultimate in technical debt, with interest payable in geopolitical influence.

The Path Forward—or the Cliff's Edge

Schmidt's message is a call to arms. The window for Europe to build a self-reliant, cutting-edge AI capability is closing fast. The choice is clear: mobilize unprecedented public-private collaboration, channel capital into homegrown talent and infrastructure, and treat AI independence as a national security priority. Or, accept a future where Europe's digital destiny is written in code it didn't author and doesn't control. The clock is ticking.

Closed versus open source models

“Unless Europe is willing to spend lots of money for European models, Europe will end up using the Chinese models. It’s probably not a good outcome for Europe,” Schmidt warned.

Closed-source models like Google Gemini and OpenAI’s ChatGPT keep their underlying code private and unavailable for public download or review. Though these systems provide a smoother and more consistent user experience, they cost more and offer less flexibility.

China has become a leader in creating open-weight models, which allow greater transparency.

Energy costs pose major challenge

Schmidt stressed that Europe needs to tackle expensive energy costs and construct more data centers to train AI technology if it wants to stay competitive globally. He has started a data center company focused on managing the massive power requirements of this infrastructure, and has previously expressed worries about AI straining electricity supplies in the United States as well.

Europe has fallen behind its American and Asian competitors in the race for AI advancement. While the continent is working to expand data centers and implement the technology, the efforts remain smaller than Silicon Valley’s. France’s Mistral AI stands as Europe’s top AI startup, reaching a value of €11.7 billion ($13.7 billion) in last year’s funding round. However, this represents just a small portion of OpenAI’s worth, which exceeds $500 billion.

Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.