At Rise of AI 2026 in Berlin, a panel with Carla Hustedt (Mercator Foundation), Kai Zenner (European Parliament, adviser to MEP Axel Voss), Aline Blankertz (Rebalance Now) and Leonie Neuhaeuser (DeepL) discusses how Europe can compete with US and Chinese tech giants without copying them. Zenner describes the Brussels debate as split between a protectionist camp wanting to exclude non-European providers and a free-market camp opposed to any European preference, and presents a third "European way" that focuses on reducing excessive dependencies while accepting that Europe cannot lead in every area. Blankertz argues that democratic and regulatory sovereignty matter as much as company ownership, since some firms can afford to break existing laws, and calls for stronger competition-law enforcement against concentrated economic power. Neuhaeuser explains DeepL's move to a hybrid cloud strategy, combining its own European data centers with a new AWS partnership for latency and reliability reasons, and argues Europe's strength lies in tailored applications rather than a general-purpose frontier model. The panel also covers public procurement as a sovereignty tool, the Munich Linux migration, and the EU's AI Act omnibus simplification process.
Key takeaways
- Kai Zenner proposes a 'European way' between excluding non-European tech and pure free-market openness: reduce excessive dependencies, invest where Europe can lead, keep fallback capacities elsewhere.
- Aline Blankertz argues digital sovereignty requires enforcing existing competition and other laws against companies that can currently afford to break them.
- Leonie Neuhaeuser says DeepL adopted a hybrid cloud strategy with AWS for latency and reliability while still training its own models on its own European data centers.
- Blankertz says AI concentrates 'chokepoint' and 'panopticon' power in big cloud providers because competition law still assesses markets individually rather than power accumulating across markets.
- Zenner cites Munich's and the German-French openDesk project as evidence that public procurement of European tech works best when transitions are well prepared and phased, not radical.
Detailed notes
The state of the sovereignty debate in Brussels
Kai Zenner, policy adviser to MEP Axel Voss and a co-founder of the Euro Stack movement, says the digital sovereignty debate in Brussels has more momentum than during earlier rounds in 2019-2020 and 2014-2015, but is still polarized between two camps: one wants to exclude non-European tech players and foster national champions, the other insists on free markets and WTO rules. He and others have proposed a third "European way": reduce excessive unilateral dependencies, invest where Europe can lead, accept minimal domestic alternatives elsewhere, and maintain credible fallback capacities where leadership is not realistic. He says the European Commission's upcoming "sovereignty/tech reality" package, covering public procurement directives and a cloud and AI development act, will show which camp prevails, and warns that a vague definition of "European company" risks being gamed, for example by a US firm creating a European subsidiary, or by an external-verification process that mainly benefits large law and accounting firms.
Democratic and regulatory sovereignty
Aline Blankertz, founder of Rebalance Now, argues the debate should also cover democratic sovereignty, whether technology serves democratically legitimate goals, and regulatory sovereignty, whether companies actually comply with existing law. She says some companies can afford to deliberately break laws, which threatens rule of law and gives them an unfair competitive advantage over compliant firms. She rejects a simple choice between European and non-European ownership, since European companies could become just as powerful and not necessarily behave better, and instead advocates using competition law against concentration of economic power wherever it sits, starting with enforcing laws already on the books.
DeepL's hybrid cloud strategy
Leonie Neuhaeuser, who leads post-LLM training and reinforcement-learning research teams at DeepL, describes digital sovereignty as more than where data sits: it also means owning your models and understanding your value chain. DeepL has trained its own translation models and run its own data centers since 2017, but recently partnered with AWS. She explains this as necessary to serve customers worldwide, for example low-latency real-time voice-to-voice translation for customers in Japan, and calls it a hybrid strategy rather than an end goal, since scalable European cloud infrastructure is not yet available. She argues Europe does not need to choose between building a frontier general-purpose model and building applications: DeepL's translation-specific foundation models show that tailored, narrow foundation models can out-compete general-purpose wrappers, and that Europe's strength lies in applications and domain data such as legal or manufacturing.
Chokepoint power in digital and AI markets
Blankertz explains why digital markets need different competition tools: platforms and, at a higher level, AI cloud providers do not just compete within individual markets but shape the markets they give access to, giving them what she calls chokepoint and panopticon power. She notes competition frameworks still assess markets individually and miss power that accumulates across markets, though the Digital Markets Act, which she says startups support, has given some room to grow. She cites analysis showing academic AI research is heavily influenced by big tech, and that Google alone has invested in over 6,000 companies, so that AI ecosystems become dependent on big tech and startups often aim for an exit to one of the giants rather than competing with them.
Public procurement as a sovereignty lever
Zenner calls public procurement an underused tool for building European tech, pointing to the US's DARPA-funded tech ecosystem as a model, but warns against radical shifts. He cites Munich's earlier attempt to move public administration to open-source software as poorly prepared, and praises the German government's more recent joint effort with France on the open-source "openDesk" project as an example of a well-prepared transition. As a separate, anonymized example, he describes another European public authority reportedly considering a similar direction but running Microsoft's operating system and Linux in parallel, letting staff switch depending on the program needed, which he calls a smart approach for a transition period. Neuhaeuser adds that the Munich Linux migration was in fact fairly successful until Microsoft offered to create jobs around Munich in exchange for reintroducing its products, and argues public administrations need real technical capability to know what they are procuring, since AI often invites "magical thinking" that skips getting underlying data right.
Q&A highlights: regulation, the AI Act, and the omnibus
Asked how the AI Act has affected DeepL's work, Neuhaeuser says it has not changed much because DeepL already built around values like reliability and had in-house evaluation benchmarks for problems such as gender bias in translation from the start; she argues regulation becomes a burden only when it turns into a checklist rather than incentivizing the quality work teams want to do anyway. Blankertz says her recent open letter, signed with around 70 other civil society organizations and addressed to Commission President von der Leyen over the Google ad-tech case, demands enforcement of existing law rather than bending EU rules to accommodate US government pressure. Zenner says the AI Act omnibus and simplification push aims to fix incoherent, siloed regulation, but that in his and his colleagues' view the current process is being rushed through without enough evidence-based work to produce real simplification.
Quotes
It's not enough to be European. We want to be world leading and we are really world leading in this specific problem we are solving there.
Leonie Neuhaeuser
We are pushing for a kind of, let's call it, third, a paper called European way, where we were saying it should not be about autarky, about protectionism.
Kai Zenner
We strongly advocate for the use of competition law to focus on the concentration of economic power, irrespective of where economic power is situated.
Aline Blankertz
Questions answered in this talk
What is the 'European way' proposal for digital sovereignty?
According to Kai Zenner at Rise of AI 2026, it is a middle path between excluding non-European tech providers and pure free-market openness: Europe should reduce excessive dependencies, invest in areas where it can lead, accept minimal domestic alternatives elsewhere, and maintain fallback capacities where it cannot lead.
Why did DeepL partner with AWS despite its focus on European infrastructure?
According to Leonie Neuhaeuser at Rise of AI 2026, DeepL adopted a hybrid cloud strategy with AWS mainly for latency and reliability reasons, so it can serve customers such as those in Japan with real-time voice-to-voice translation, while continuing to train its own models on its own European data centers.
Why do digital and AI markets need different competition rules?
According to Aline Blankertz at Rise of AI 2026, cloud and AI providers do not just compete within single markets but shape the markets they give access to, giving them chokepoint and panopticon power that current market-by-market competition analysis does not capture.