How Europe’s Tech-Shy Fortune 500 Is Embracing AI

Europe’s largest companies are predominantly in “old” industries. It’s a trend we first identified in our inaugural Fortune 500 Europe list last year, where the top 10 is dominated by fossil fuel, automotive and financial giants.

This does not compare favorably with the US list, where dynamic technology and pharmaceutical companies fight for the top spot alongside retail groups, or even technology and retail hybrids, notably Amazon.

There are just 15 technology companies in this year’s Fortune 500 Europe, compared to 49 in the US. American technology companies represent 5 times more revenue on the list compared to those in Europe.

This explains part of the large difference in revenue between the lists. North American companies on the Fortune 500 list racked up $18.8 billion in revenue last year, compared with $14.5 billion for European titans.

While the early winners of the AI ​​boom – NVIDIA, Microsoft and Google – were found on the western side of the Atlantic Ocean, traditional companies are quickly realizing the opportunities of automation.

Peter Oppenheimer, chief global equity strategist at Goldman Sachs and head of macro research in Europe, said Fortune Earlier this year, the biggest winners from AI could be the companies leveraging the technology rather than those at its forefront, similar to the canal boom of the 18th century.

Amid a widening gap between AI players in the US and the rest of the market, and ongoing CEO bickering over regulation in Europe, companies on the continent leveraging AI to find efficiencies represent the best opportunity for Europe bridges the gap with the States.

But the race is on. In his 69-page report on EU competitiveness, former ECB president Mario Draghi highlighted that European productivity diverged from that of the US in the 1990s thanks to the failure to “capitalize on the first internet-led digital revolution”.

To avoid being left behind in the latest AI-based revolution, the vertical integration of technology across European industries will be key, says Draghi, and it needs to be fast.

“The question for European companies is how they can leverage AI more aggressively, regardless of its origin. There is a lot of potential for them to leverage the billions of dollars invested globally,” said Mark Read CBE, CEO of communications company WPP. Fortune.

AI adopters in Europe

The debut of the inaugural Fortune 500 Europe 2023 list came as companies were beginning to come to terms with the implications of the advent of ChatGPT. Large Language Models (LLMs) have enabled all members of a family to use technology, giving them their first real understanding of their capabilities.

“The topic (of AI) itself is not new,” said Florian Mueller, head of the EMEA AI practice at consultancy Bain & Co. Fortune.

“I think what has changed, and ChatGPT probably marks the real moment of change, is that the speed of adoption has increased dramatically.”

Mueller adds that compared to previous technological revolutions, implementing AI in an organization is relatively affordable.

Early evidence suggests that Europe’s biggest successes don’t want to be left behind in the latest technological revolution.

Mueller says that traditionally, implementing AI was typically the purview of industries that already dealt with a lot of data, for example, companies working in data communications, banking and insurance.

He added that the broad technology integration over the past two years has been found in Generation AI.

“Whether you use it for software development, for customer service, or to support knowledge workers in their processes, there is a lot of acceptance in the marketing space. All the ones you see on literally every level.”

Volkswagen, the leader of the Fortune 500 Europe in 2024, announced in January that it had launched an AI company, following the introduction of ChatGPT in its vehicles at the beginning of the year.

Several car manufacturers are using LLMs as in-car assistants, while AI is laying the foundation for the potential future of autonomous driving.

Shell, a predominantly 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, partnered with C3 AI to develop predictive maintenance capabilities, and used machine learning for inventory and demand forecasting.

The pharmaceutical sector, which includes Fortune 500 companies in Europe such as Roche Group, Novartis and Sanofi, is rapidly leveraging AI in cutting-edge drug discovery.

The shift, Mueller says, has created a war for talent, as non-tech companies scramble 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 applauded companies’ enthusiasm for the technology that promised to boost productivity. However, this early in the game, there still aren’t many examples of this investment translating into significant returns on investment.

The European banking sector could be the first example of an industry that will use AI to increase profitability.

Evident, an intelligence platform, created an index of global banks classified by their levels of preparation for AI, breaking them down by talent, innovation, leadership and transparency. Inevitably, European companies lag behind American companies, which laid the foundations for the AI ​​transition in advance.

Alexandra Mousavizadeh, co-founder and CEO of Evident, says Evident chose banking as an example of acceptance because it represented “massive organizations that were moving from legacy to trying to become AI first” and was using AI in functions across the enterprise. your organization.

European banks, including HSBC and Spanish group BBVA, were among the biggest climbers in the Fortune 500 last year. But for other companies that have been slow to introduce autonomous systems and hire the hottest new AI talent, the window of opportunity is closing.

“When it really comes down to ROI over the next 18 months, they’re just going to move on. And when that starts, the game is over,” said Mousavizadeh Fortune.

Startup DeepL provides translation services to half of the US Fortune 500 companies. David Parry-Jones, chief revenue officer at DeepL, says there is a lot of noise around LLMs that has made it difficult to implement within organizations.

“The promise is obviously dramatic based on what these things could do, but the reality of implementation within a large enterprise is not the same,” Parry-Jones said. Fortune.

Regulatory obstacles

Several CEOs, including Spotify co-founder Daniel Ek, have warned that regulatory differences between Europe and the US could cause Europe to miss out on the latest technological revolution.

Speaking to the TF Earlier this week, Nicolai Tangen, CEO of the $2 billion Norwegian oil fund, summed it up: “In America, there is too much AI and too little regulation, and in Europe, there is too little AI and too much regulation.”

Matt Brittin, president of Google EMEA, says that, in many ways, Europe is in an excellent position when it comes to AI.

”It has a well-skilled workforce and a single market, which could help scale new innovations and benefit everyone quickly. However, as Mario Draghi’s report last month concluded, the EU is falling behind its global counterparts when it comes to innovation,” said Brittin. Fortune.

Brittin agreed that a particular challenge in the EU was the extent to which AI regulation was implemented in the region.

“In the last five years, we have seen more than 100 new laws affecting the digital economy and society. Of course, there must be clear traffic rules, but these rules are often contradictory, untested and inconsistently implemented.

“Simply put, developing, launching or just using technology is more difficult in Europe than anywhere else in the world. To stay in the global race, the EU needs a new approach: mitigating the risks of new technologies while enabling innovation.”

This story was originally featured on Fortune.com