Europe wants to be part of the AI race against China and the U.S. — and shake off its anti-innovation image
Sam Altman, CEO of OpenAI, speaks with French President Emmanuel Macron at Station F, during an event on the sidelines of the Artificial Intelligence Action Summit in Paris, France, Feb. 11, 2025.
Aurelien Morissard | Via Reuters
PARIS — Music was blaring and people were cheering at the Artificial Intelligence Action Summit in Paris on Monday as French President Emmanuel Macron declared France is “back in the AI race.”
The bold call comes after Macron touted a 109 billion euro ($112.8 billion) investment in AI in the country. But it also underscores Europe’s desire, led by France, to be a part of the conversation around AI leadership and innovation that has so far been dominated by the U.S. and China.
Last month, America’s $500 billion Stargate announcement made headlines globally, followed by DeepSeek’s AI model, which sent shock waves across financial markets and highlighted China’s ability to keep apace with U.S. innovation.
Europe has long been seen by its critics as a place that has regulated the tech industry too heavily to the detriment of innovation.
Though that image has not entirely been changed, there are some in the technology industry who think Europe is moving in the right direction.
“As a European region, at least, we are starting to see global leaders emerge, and that’s the thing we really need,” Victor Riparbelli, CEO of AI video company Synthesia, told CNBC in an interview on Monday.
There are a number of key companies in Europe, ranging from self-driving technology startup Wayve in the U.K. to OpenAI rival Mistral in France.
“So I think it’s great that we invest more in infrastructure. I don’t think it’s the sole solution to the problem. … But what I think is really great is that there’s political will to actually do something,” Riparbelli added.
‘Fork in the road’
Last year, economist and politician Mario Draghi released a report that urged more investment in the European Union in order to boost competitiveness.
Draghi’s report noted that there are innovative ideas, but startups are “failing to translate innovation into commercialisation, and innovative companies that want to scale up in Europe are hindered at every stage by inconsistent and restrictive regulations.”
Chris Lehane, chief global affairs officer at OpenAI, told CNBC on Monday that based on his experience at the AI Action Summit, there is tension between Europe at the EU level and the countries within it.
“You can get this sense that there’s almost this fork in the road, maybe even a tension right now between a Europe at the EU level that is looking at a fairly significant, heavier regulatory approach. And then some of the countries, a France, a Germany, a UK, though not technically the EU, certainly European, they’re looking to maybe go in a little bit of a different direction that actually wants to embrace the innovation,” Lehane told CNBC.
He said that previous AI summits hosted by the U.K. and South Korea have focused on the safety around AI, but the Paris edition has a change of tone.
“I think this conference, you’re beginning to see maybe a different definition or consideration, that perhaps the bigger risk right now is missing out on the opportunity,” Lehane added.
Europe the ‘referee’
Still, the image of Europe as a burdensome place for tech regulation has not been shaken.
The EU’s AI Act was the first major law in the world governing artificial intelligence to go into effect in 2024. It has been criticized by companies as well as individual countries such as France which have said that the legislation could stifle innovation.
“One of the metaphors I sometimes use you look at AI as a World Cup football match between the U.S. and China. And if all Europe is trying to do is be the referee, there’s two problems. One, they never win, and two, no one really likes the referee,” Reid Hoffman, the co-founder of LinkedIn and an investor at venture capital firm Greylock, told CNBC on Monday.
Christel Heydemann, the CEO of telecommunications firm Orange, told CNBC in an interview on Tuesday that there is too much regulation in Europe.
“So that’s that’s slowing us down, especially when you think about the potential of the European market,” Heydemann said.
She did, however, strike an optimistic tone on Europe’s position on AI.
I don’t think, in the end, it’s a race between U.S. and China. Actually, the president of the European Commission has been very clear, Europe wants to be a continent of AI, and the race is not over yet,” Heydemann added.
Mark Lenhard, CEO of U.K.-based remittances platform Zepz.
Lukas Schulze | Sportsfile for Web Summit via Getty Images
LONDON — British digital remittances company Zepz is laying off dozens of IT workers and is in the process of closing down business units in Poland and Kenya.
Roughly 200 staff members will be impacted by the redundancy measures, two employees who were made redundant told CNBC, asking to remain anonymous due to the sensitivity of the matter.
As of January, London-headquartered Zepz — formerly known as WorldRemit — had a global headcount of 1,000 people, meaning the redundancies affect around 20% of its total workforce.
The layoffs affect several IT functions at the company, including database administration, development operations and software engineering, the former employees said.
Zepz confirmed to CNBC that it was reducing headcount in order to “sustainably support the next phase of long-term strategic goals and continued growth.” The company declined to comment on the number of employees impacted by the layoffs, with a spokesperson explaining that the redundancy process was ongoing.
“Following the successful completion of its replatforming efforts, bolstered by advanced automation and AI, Zepz has embarked on a strategic initiative to optimise operations across the organisation,” a Zepz spokesperson told CNBC by email.
“This transformation has reinforced the technology foundation and reduced the need for certain operational and technical capacities, prompting a proposed reduction in roles as part of the overall plan,” the spokesperson added.
Zepz has been touted as one of Britain’s fintech darlings. The company was founded by Ismail Ahmed, a Somalia-born British entrepreneur who fled the country during the Somali Civil War. Ahmed today serves as the company’s non-executive chairman.
The group was renamed Zepz following the acquisition of money transfer platform Sendwave in 2020, with the brand and WorldRemit coming under one parent company.
‘Difficult choice’
CNBC obtained a company memo announcing the cost-cutting measures shared by Zepz CEO Mark Lenhard internally in January.
“Today we are announcing a very difficult decision — proposed reductions in our team across all HQ functions, and most regions. And specifically we are proposing the closure of our Kenya and Poland employing entities,” Lenhard said in the memo.
Zepz touts itself as a “remote-first employer,” with regional offices in Kenya and Poland.
“This is a difficult choice, which impacts the lives of our colleagues and friends. This is also a choice which is critical to the success of our mission to serve immigrants everywhere. Both facts are true, at the same time,” Lenhard said.
“To be clear, this is not a change of strategy. We’re doubling down on our mission in an effort to expand our impact faster,” he added. “In some places, this will mean we’ll need to continue to ruthlessly prioritize. In others, we’re going to get more efficient. In many cases it will involve rethinking how we do things today.”
Zepz’s spokesperson insisted that the IT worker layoffs “will not impact customers in any region or market,” and added that the firm “remains committed to its mission of serving migrants worldwide, driving innovation, and delivering meaningful financial solutions to millions globally.”
This isn’t the first time Zepz has cut a spate of roles to save on costs. In 2023, Zepz laid off 420 employees, which accounted for about 26% of its global headcount at the time. Later that year, Zepz slashed a further 30 roles across its people and marketing functions.
Zepz has long been touted as a potential IPO candidate, but a timeline for this is unclear. Counting the likes of Accel, TCV and Leapfrog as investors, the startup was valued at $5 billion in 2021. The company announced a $267 million funding round last year.
Zepz faces competition from several notable digital payments players including PayPal, Wise, Revolut and Remitly.
WATCH: We now have ‘a whole generation’ of fintechs preparing for IPOs, says QED Investors’ Nigel Morris
Technology
SoftBank posts surprise loss of $2.4 billion in third quarter as Vision Fund investments go into red
The logo of SoftBank is displayed at a company shop in Tokyo, Japan January 28, 2025.
Issei Kato | Reuters
SoftBank Group posted a surprise quarterly loss Wednesday as investments under its Vision Funds fell into red. The Japanese company’s revenue also missed analysts’ estimates.
Here are Softbank’s results compared with LSEG SmartEstimate, which is weighted toward forecasts from analysts who have been more consistently accurate:
- Revenue: 1.83 trillion yen vs. 1.84 trillion yen
- Net loss of 369.17 billion yen ($2.4 billion) vs. a profit of 298.53 billion yen
The company’s Vision Fund investments clocked a loss of 352.75 billion yen for the quarter ended Dec. 31. They had posted a gain for the preceding two quarters.
The broader Vision Fund segment — which factors in administrative costs, fluctuations in currency, among other things — reported a loss of 309.93 billion yen during the quarter.
SoftBank reported a 2.1% quarter-on-quarter drop in its Vision Fund 1 public portfolio companies, primarily due to a decline in the share price of e-commerce company Coupang, while the value of its investments in private companies dropped 3.3%. Overall, the fair value of SoftBank’s Vision Fund 1 portfolio companies declined by 2.8% from the previous quarter-end.
Vision Fund 2 fair value fell by 3.7% from the prior quarter-end. Decreases in the share prices of public companies such as EV-maker Ola Electric Mobility and warehouse automation firm AutoStore outweighed a jump in the stock of food delivery firm Swiggy following its November 2024 listing.
In recent years, SoftBank has made a number of high-value investments in companies that have struggled or marked down their valuations.
It is now repositioning itself to take advantage of the artificial intelligence boom, where players such as Nvidia have benefited from meteoric demand for chips and data center GPUs.
SoftBank is close to finalizing a $40 billion primary investment in OpenAI at a $260 billion pre-money valuation, sources recently told CNBC’s David Faber.
The new funding would see SoftBank surpass Microsoft as the artificial intelligence startup’s top backer, with OpenAI last valued at $157 billion by private investors in October.
SoftBank has already committed to spending $3 billion per year on OpenAI’s tech. The two companies also have announced a new joint venture called “SB OpenAI Japan,” which will market OpenAI’s enterprise tech exclusively to major companies in Japan.
SoftBank reported its quarterly earnings after trading closed at the Tokyo stock exchange. It’s shares gained 45% last year.
— CNBC’s Hayden Field contributed to this report.
Technology
Chinese tech giant Baidu to release next-generation AI model this year as DeepSeek shakes up market
Men interact with a Baidu AI robot near the company logo at its headquarters in Beijing, China April 23, 2021.
Florence Lo | Reuters
BEIJING — China’s Baidu plans to release the next generation of its artificial intelligence model in the second half of this year, according to a source familiar with the matter, as newer players such as DeepSeek disrupt the segment.
Ernie 5.0, called a “foundation model,” is set to have “big enhancements in multimodal capabilities,” the source said, without specifying its functions. “Multimodal” AI can process texts, videos, images and audio to combine them as well as convert them across categories — text to video and vice-versa, for instance.
Foundation models can understand language and perform a wide array of tasks including generating text and images, and communicating in natural language.
Baidu’s planned update comes as Chinese companies race to develop innovative AI models to compete with OpenAI and other U.S.-based companies. In late January, Hangzhou-based startup DeepSeek prompted a global tech stock sell-off with the release of its open-source AI model that impressed users with its reasoning capabilities and claims of undercutting OpenAI’s ChatGPT drastically on cost.
“We are living in an exciting time … The inference cost [of foundation models] basically can be reduced by more than 90% over 12 months,” Baidu CEO Robin Li said at the World Governments Summit in Dubai this week. That’s according to a press release of his fireside chat with Omar Sultan Al Olama, UAE’s minister of state for artificial intelligence, digital economy, and remote work applications.
“If you can reduce the cost by a certain percentage, then that means your productivity increases by that kind of percentage. I think that’s pretty much the nature of innovation,” Li noted.
Baidu was the first major Chinese tech company to roll out a ChatGPT-like chatbot called Ernie in March 2023. But despite initial momentum, the product has since been eclipsed by other Chinese AI chatbots from startups as well as large-tech companies such as Alibaba and ByteDance.
While Alibaba shares have soared 33% for the year so far, Baidu shares are up 6%. Tencent has notched gains of about 4% for the year so far. ByteDance is not listed.
Baidu’s Ernie model already supports the integration of generative AI across a range of the company’s consumer and business-facing products, including cloud storage and content creation.
Last month, Baidu said its Wenku platform for creating presentations and other documents had reached 40 million paying users as of the end of 2024, up 60% from the end of 2023. Updated features, such as using AI to generate a presentation based on a company’s financial filing, started being rolled out to users in January.
The current version of the Ernie model is Generation 4, released in Oct. 2023. An upgraded “turbo” version Ernie 4.0 was released in August 2024. Baidu has not officially announced plans to release the next generation update.
The latest version of OpenAI’s ChatGPT, GPT-4o, was released in May 2024. OpenAI CEO Sam Altman said in a Reddit “ask me anything” session earlier this month that there wasn’t a public timeline for GPT-5’s release.
Baidu did not respond to a request for comment.
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