Despite Europe’s reputation as a tech laggard, a cadre of companies is making big bets on artificial intelligence (AI). 

While the region has been slow to embrace AI in critical sectors like healthcare and government, according to a recent European Parliamentary Research Service study, these firms are forging ahead with projects they say could disrupt industries from finance to manufacturing. Their efforts offer a glimpse of how Europe’s unique approach to AI — marked by stricter regulation and greater emphasis on ethics compared to the U.S. and China — could shape the technology’s future impact on business.

“Big picture, Europe leans toward stricter regulations and ethical considerations — it’s a similar picture as that of privacy and data protection, where U.S. and EU diverge significantly,” Lars Nyman, chief marketing officer at CUDO Compute, told PYMNTS. “The EU has a more comprehensive approach with binding rules for various AI applications impacting social and economic aspects. [The] U.S. is more focused on industry-driven innovation with lighter regulations. Individual agencies are starting to develop guidelines for specific sectors, though.”

Varying Approaches to AI

The report lists obstacles in Europe that hinder wider AI adoption, such as regulations, trust concerns, a lack of digital skills, and limited digitalization in companies. According to the new report, different EU countries have varying approaches to investing in AI. Some provide direct funding for research and development (R&D), while others support it indirectly through digitalizing businesses and public services.

Spain’s National Recovery and Resilience Plan (NRRP) dedicates funds to boost AI development, aiming to make the country a leader in AI research and innovation. The focus is on creating AI tools and applications in Spanish to increase productivity in private companies and streamline public administration.

Italy’s Strategic Programme on AI (2022-2024), part of the broader EU AI strategy, seeks to establish Italy as a global center for AI research and innovation by improving skills and attracting top AI talent.

Denmark is using its strong R&D network and high digitalization rate among small and medium-sized enterprises (SMEs) to enhance its national digital strategy, integrating AI to reform public administration.

Recent developments in European AI, particularly in automated regulatory compliance and AI-driven supply chain optimizations, are transforming commerce, Toufi Saliba, CEO and founder of AI company HyperCycle, told PYMNTS.

“These advancements allow businesses to operate more efficiently and adapt to the complex regulatory environment in Europe,” he said. “We’re also witnessing a significant rise in computing costs globally. HyperCycle’s innovative design substantially reduces these costs by enabling AI models to interact with each other, thereby accelerating their training and optimization processes far more efficiently than within isolated environments.”

Bold Names in European AI

The European artificial intelligence (AI) landscape is marked by the presence of prominent research centers and innovative companies that are driving advancements in various domains, Nyman said. Among the notable research institutions are the French Institute for Research in Artificial Intelligence (FAIR) and The German Research Center for Artificial Intelligence (DFKI). These centers are at the forefront of AI research, focusing on fundamental and applied research in machine learning, deep learning, natural language processing, computer vision and other key areas of AI.

In addition to research centers, several European companies have emerged as leaders in the AI industry. DeepMind, a London-based AI company acquired by Alphabet (Google’s parent company), has made significant strides in developing advanced AI systems capable of learning and problem-solving in complex environments.

Another U.K.-based company, Graphcore, is making waves in the AI hardware space. Graphcore has developed innovative AI accelerator chips designed to optimize the performance of machine learning algorithms. These chips have the potential to revolutionize AI computing by enabling faster and more efficient processing of large datasets, which is crucial for training and deploying AI models.

The application of AI in the pharmaceutical industry has also seen progress in Europe. Companies like BenevolentAI and Exscientia, both based in the U.K., are utilizing AI to accelerate drug discovery and development. By leveraging machine learning algorithms and vast amounts of biomedical data, these companies aim to identify promising drug candidates more efficiently and reduce the time and cost associated with traditional drug discovery methods.

Furthermore, the field of AI in communication is witnessing significant growth, with well-established European companies like Skyscanner and Trivago leading the way. These companies are employing AI techniques to enhance user experiences and optimize their advertising efforts. For example, Skyscanner uses AI to personalize travel recommendations based on user preferences and behavior, while Trivago leverages AI to improve its hotel search and pricing algorithms.

For all PYMNTS AI coverage, subscribe to the daily AI Newsletter.