Eir owner Xavier Niel to invest €200m in artificial intelligence

French billionaire Xavier Niel, who controls the Eir telecoms group, is investing €200 million in artificial intelligence, as one of the biggest names in European tech tries to ensure the region remains competitive in the innovation race with the US and China.

Mr Niel’s telecoms group Iliad, through which he owns 64.5 per cent of Eir, will invest across projects that include a cloud supercomputer powered by Nvidia, a research centre in Paris and an annual AI conference at Station F, Mr Niel’s start-up campus in the French capital, the group announced on Tuesday.

“To influence the AI market, you need computing power. To have computing power, you need supercomputers. And to have supercomputers, you have to invest massively,” Mr Niel said in a statement.

Through its cloud computing subsidiary Scaleway, Iliad has been working in recent years to develop a European alternative cloud system to those offered by big US-based tech companies, Mr Niel added. “By equipping it with a supercomputer, we want – and we can – create a European AI champion. It’s a question of sovereignty: to protect our data, we need platforms established on our territory,” he said.

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The race to develop AI expertise has sharpened geopolitical rivalries as Europe scrambles to keep up with heavy investment in the new technological frontier by US and Chinese rivals. Policymakers have echoed the view that they see AI development as a matter of sovereignty.

Mr Niel wants the research lab to foster a French AI ecosystem that can rival Microsoft-backed OpenAI in the US, the artificial intelligence lab that developed language model chatbot ChatGPT, drawing on the expertise of graduates from France’s top schools.

In June, the then four-week-old French start-up Mistral raised €105 million in Europe’s largest seed round to build its own AI software to rival Silicon Valley companies such as OpenAI and Google’s DeepMind. French president Emmanuel Macron announced €500 million in new funding that same month, to bolster French generative AI projects and the open-source movement.

Ben Barringer, equity research analyst at investment management firm Quilter Cheviot, said that since training a large language model alone costs about $100 million, €200 million “could well be a drop in the ocean in comparison to what is actually needed”.

“It is no surprise that those who are likely to be the big winners from AI – Nvidia, Microsoft, Alphabet etc – have the deepest pockets and best expertise,” he said.

The push for French AI development comes as European policymakers and politicians are seeking to balance the region’s desire to develop a foothold in generative AI with a need to regulate the emerging technology, to avoid the negative consequences experienced with previous technological innovations like social media.

“It is not enough to create a champion, but an entire French ecosystem. Because we want to contribute to it, we are going to create an AI research laboratory, providing the means and recruiting the best researchers,” Mr Niel said. – Copyright The Financial Times Limited 2023