German Chancellor Olaf Scholz praised the investment, saying in a news release that it will improve the computing infrastructure in the county and strengthen the German AI ecosystem.

The investment will be used to build new data centers near Frankfurt and in North Rhine-Westphalia, according to Smith. Some of the funding will also go toward training about 1.2 million German workers.

Impending regulation

Both companies’ investments in Western Europe appear to be an effort to comply with EU AI regulations, said Jason Wong, distinguished vice president analyst at Gartner.“Microsoft, Google, and other companies that host generative AI models will need to build the requisite infrastructure and operations in Europe to be compliant with existing and emerging regulations on AI data and usage by consumers and businesses,” he said by email.

This week, two groups of lawmakers in the European Parliament ratified a provisional agreement as a step toward an April vote on landmark legislation that would create the world’s first AI regulations. The proposed EU AI Act would ban the use of AI to create “unacceptable risk,” including cognitive behavioral manipulation of people or classifying people based on behavior, socio-economic status, or other personal characteristics.

The legislation would also require AI tools that represent a “high risk” to be registered with the EU. High-risk AI applications include those used in cars, medical devices, and aviation. AI developers would also have to register AIs used in law enforcement, education, operation of critical infrastructure, and several other applications.

General-use AIs like ChatGPT or Google’s Gemini would be subject to transparency requirements, including disclosure of content generated by AI. The EU legislation would require AI developers to design their models to prevent them from generating illegal content.