BRUSSELS — Europe is at risk of falling into a technology “dependency trap” as artificial intelligence reshapes global trade and shifts economic power toward the United States and Asia, according to a report published on Tuesday by the German insurer Allianz that lays bare how thin the continent’s leverage has become in the industries now defining the next decade of growth.
The report describes a world economy reorganising around cloud computing, data centres and semiconductors, three sectors where Europe is structurally weaker than its main competitors. Asia accounts for 65 percent of global exports of AI-related goods, with seven of the world’s top 10 AI exporters located on the continent. The wider AI economy has grown from $1 trillion in 2014 to $3.8 trillion last year, the report found, an expansion that has rerouted trade flows and concentrated capacity in a small number of countries.
The United States has tripled its AI-related imports since 2023, fuelled by an aggressive build-out of data centres and cloud capacity. America is now home to nearly half of the world’s data centres. Europe’s AI-related imports over the same period have grown by only 40 percent, a gap the Allianz analysts describe as a widening “infrastructure deficit” that will be difficult to close without a sharp change in policy.
The numbers on commercial control are even starker. American technology companies hold an 80 percent share of the European cloud computing market, 59 percent of enterprise software revenue and 73 percent of customer management software. Up to 40 percent of operational computing capacity across the bloc, and nearly half of all upcoming data centre projects, sit in the hands of US firms. “Structural constraints, fragmented regulation, complex permitting processes, grid connection delays, no domestic hyperscaler and limited venture or state-backed funding reinforce this dependency,” the report said.
The analysts go further, raising the prospect of a US “kill switch” on European cloud services that could be triggered by a future trade dispute or political confrontation. “Europe is permanently under the threat of a US kill switch on cloud data, meaning that the country can turn off these services whenever it wants,” the report said, warning of a widening service imbalance between the two blocs if European firms continue to outsource AI infrastructure to American providers.
That warning comes against a backdrop of escalating tariffs and export controls under the second Trump administration and follows a separate study last month from a Brussels-based think tank that flagged the same risk to Europe’s defence cloud, as reported by mainstream press. The Allianz report makes clear that the concern has now moved from defence specialists to mainstream financial analysts at one of the continent’s largest insurance and asset management groups.
The hardware story is no easier. Europe imports 57 percent of its IT equipment and more than half of the gear needed to fit out new data centres from just five Asian economies, Taiwan, China, South Korea, Malaysia and Vietnam. Graphics processors, the chips required to train large AI models, are produced almost exclusively at Taiwanese foundries operated by TSMC, where a parallel race between Nvidia and Huawei is reshaping the global supply picture. Any disruption in the Taiwan Strait, the analysts warn, would land on European AI projects within weeks and on European production lines within months.
Allianz attributes much of the slippage to what it calls a “dual deficit” in Europe, of insufficient private capital and fragmented public policy. American firms can raise hundreds of billions of dollars for AI infrastructure from a deep domestic venture market, while in China the state directs investment and accelerates permitting. Europe, the report said, has neither.
The mechanics on the ground bear that out. Data centre projects in parts of Europe routinely take four years to break ground because of permitting delays, environmental reviews and limited urban land, and as long as five years where the providers have to wait for connection to ageing power grids that cannot handle the load. By contrast, hyperscale builds in Texas, Virginia and parts of the American Midwest now move from announcement to operations in 18 to 24 months.
The report comes a week after the European Commission’s digital chief defended Brussels’ approach to technological sovereignty, telling reporters that the goal was not to wall off Europe from American or Chinese suppliers but to ensure the bloc retained options. The Allianz analysts offered a more sceptical reading, arguing that the present trajectory leaves Europe with “limited strategic leverage and meaningful exposure to supply-chain disruptions” regardless of the rhetoric coming out of Brussels.
There are bright spots. The report flagged industrial engineering, automation and regulatory AI as areas where European firms remain competitive, and it pointed to sovereign computing projects in France and Sweden that aim to move public services off Google Cloud and Amazon Web Services in favour of locally owned alternatives, echoing earlier high-profile cloud cutoffs that revealed how much leverage American providers hold over their foreign customers. Germany’s federal innovation agency last week launched a 125 million euro competition to seed a European frontier AI lab, an initiative that per news reports received broad backing across the centre-right and centre-left in the Bundestag.
The analysts described those efforts as “promising counterweights” but said they remain modest relative to the scale of US and Chinese spending. American firms alone are committing more than $300 billion to AI infrastructure this year, multiples of the entire European public and private commitment combined. Closing the gap, the report concluded, will require the bloc to clear its regulatory and capital constraints quickly, or accept that the next phase of the AI economy will be built and run elsewhere.
For European policymakers, the warning lands at an awkward moment. The EU AI Act is still working through its implementation phase, the bloc is negotiating a digital omnibus regulation that critics say either goes too far or not far enough, and the trade relationship with Washington remains fraught after months of tariff threats. The Allianz analysts left little doubt about the stakes. Without a sharper move on capital, permitting and infrastructure, they wrote, Europe risks not just lagging behind in AI but losing the leverage to set the terms of its own digital economy.
