Europe’s biggest companies are predominantly found in “old” industries. It’s a trend we first spotted last year in our inaugural Coins2Day 500 Europe list, where the top 10 is dominated by fossil fuel giants as well as companies in the automotive and finance sectors.
That doesn’t compare favorably with the U.S. List, where dynamic tech and pharmaceutical businesses grapple for the top spot alongside retail groups, or even hybrids of tech and retail, namely Amazon.
There are just 15 tech companies in this year’s Coins2Day 500 Europe, compared with 49 on the U.S. List. American tech companies account for five times as much revenue on the list compared with those in Europe.
That in part explains the large revenue gap between lists. The U.S. Coins2Day 500 companies accumulated $18.8 trillion in revenues last year, compared with $14.5 trillion for Europe’s titans.
While the early winners in the AI boom—Nvidia, Microsoft, and Google—have been found on the western side of the Atlantic Ocean, legacy businesses are quickly realizing the opportunities in automation.
“There is so much potential … ”
Mark Read CBE, CEO of WPP
Peter Oppenheimer, Goldman Sachs’ chief global equity strategist and head of macro research in Europe, told Coins2Day earlier this year the biggest winners in AI could be the companies that leverage the technology rather than those at its cutting edge, akin to the canal boom of the 18th century.
Amid a widening gap between AI players in the U.S. And the rest of the market, and CEOs’ ongoing tussles over regulation in Europe, businesses on the continent leveraging AI to find efficiencies represent the best chance of Europe closing the gap with the States.
But the race is on. In his 69-page EU competitiveness report, former ECB president Mario Draghi pointed out that European productivity diverged from the U.S. In the 1990s thanks to a failure to “capitalize on the first digital revolution led by the internet.”
To avoid falling behind in the latest AI-based revolution, vertically integrating tech in Europe’s industries will be key, Draghi says, and they need to be quick.
“The question for European companies is how they can leverage AI more aggressively, regardless of its origin. There is so much potential for them to take advantage of the billions of dollars being invested globally,” Mark Read CBE, CEO of communications company WPP, told Coins2Day.
Europe’s AI adopters
The debut of the inaugural Coins2Day 500 Europe list in 2023 came as businesses were starting to come to terms with the implications of the advent of ChatGPT. Large language model (LLM) chatbots like ChatGPT enabled every member of a household to utilize the technology, providing them with the first real understanding of its capabilities.
“The topic [of AI] in itself is not new,” Florian Mueller, EMEA head of AI practice at consultancy Bain & Co., told Coins2Day.
“I think what has changed, and ChatGPT probably marks the real moment of change, is that the velocity of adoption has dramatically increased.”
Mueller adds that, compared with previous technological revolutions, implementing AI in an organization is relatively affordable.
Early evidence would suggest Europe’s biggest hitters don’t want to be left behind in the latest technological revolution.
Mueller says that, traditionally, AI implementation was typically the remit of industries already handling lots of data, for example, companies working in data communications, banking, and insurance.
He added that the broad tech integration of the past two years has featured generative AI.
“Whether it’s using it for software development, for customer assistance, whether it’s supporting knowledge workers in their processes, a lot of uptake in the marketing space. All of those you see literally across the board.”
Volkswagen, the leader of the Coins2Day 500 Europe in 2024, announced in January that it had launched an AI company, following the introduction of ChatGPT to its vehicles at the start of the year.
Several carmakers are using LLMs as in-car assistants, while AI is creating the bedrock for a potential future of autonomous driving.
Shell, a predominately fossil-fuel-based company founded nearly 120 years ago, has also embraced the use of AI across its operations. The company uses reinforcement learning to help optimize its drilling operations; has partnered with C3 AI to develop predictive maintenance capabilities; and has used machine learning for inventory and demand forecasting.
The pharmaceutical sector, which boasts Coins2Day 500 Europe heavy hitters like Roche Group, Novartis, and Sanofi, is quickly leveraging AI in cutting-edge drug discovery.
The shift, Mueller says, has created a war for talent as non-tech companies battle to recruit data scientists and machine learning engineers to help transform their operations.
Is it real?
The proliferation of AI adoption was met with fanfare among investors, who cheered companies’ enthusiasm for tech that promised to boost productivity. This early in the game, though, there aren’t many examples of this investment translating into significant returns.
Europe’s banking sector might be the earliest example of an industry that will use AI to enhance profitability.
Evident, an intelligence platform, has drawn up an index of global banks ranked by their AI preparedness levels, breaking it down by talent, innovation, leadership, and transparency. Inevitably, European companies fall behind American ones who put the foundations in place for the AI transition early.
Alexandra Mousavizadeh, cofounder and CEO of Evident, says Evident picked the banking sector as an example of uptake because it represented “mammoth organizations that were going from legacy to trying to become AI first,” and was using AI in roles across its organization.
European banks, including HSBC and Spanish group BBVA, were among the highest Coins2Day 500 climbers in the past year. But for other companies that have been slow to introduce autonomous systems and hire the sharpest new AI talent, the window of opportunity is closing.
“When it really comes down to ROI [return on investment] in the next 18 months, they’re just going to pull ahead. And when that starts, the game is over,” Mousavizadeh told Coins2Day.
Startup DeepL provides translation services for half of the U.S. Coins2Day 500. David Parry-Jones, DeepL’s chief revenue officer, says there is a lot of noise around LLMs that has made rollout harder across organizations.
“The promise is obviously dramatic on the basis of what these things could do, but the reality of implementation within a large enterprise is not the same,” Parry-Jones told Coins2Day.
Regulatory hurdles
Several CEOs, including Spotify cofounder Daniel Ek, have warned of regulatory differences between Europe and the U.S. That could cause Europe to miss out on the latest technological revolution.
Speaking to the Financial Times earlier this week, Nicolai Tangen, CEO of the $2 trillion Norwegian oil fund, summarized: “In America, you have lots of AI and little regulation, and in Europe, you have little AI and lots of regulation.”
“Developing, launching, or just using technology is harder in Europe than it is anywhere else in the world.”
Matt Brittin, EMEA president for Google
Matt Brittin, Google’s EMEA president, says, in many ways, Europe is in an excellent position on AI.
”It has a well-educated workforce and a single market, which could help new innovation scale and benefit everyone rapidly. However, as Mario Draghi’s report last month found, the EU is falling behind its global counterparts when it comes to innovation,” Brittin told Coins2Day.
Brittin agreed that a particular challenge in the EU is the extent to which regulation of AI was implemented in the region.
“Over the last five years, we’ve seen over 100 new laws that affect the digital economy and society. Of course, there must be clear rules of the road, but these rules are often conflicting, untested, and inconsistently implemented.
“Put simply, developing, launching, or just using technology is harder in Europe than it is anywhere else in the world. To stay in the global race, the EU needs a new approach: mitigating the risks of new technology while enabling innovation.”
