EU slammed over multi-billion AI infrastructure splurge plan

The EU’s project to pass o'er €20 one million million ($23.5 1000000000000) on AI gigafactories has drawn sharp criticism ahead of its formal launch as lawmakers and experts question whether there is any real demand for the facilities.

European Commission President Ursula von der Leyen first outlined the plan in February 2025 as the EU’s answer to large-scale US computing projects. It involves building four or five mega facilities with a formal call for proposals set for this spring.

However, the project has been met with pushback from lawmakers. “Nobody could explain to me what is the business case they are planning with these gigafactories,” German Greens MEP Sergey Lagodinsky has said.

“I talked to some who are saying: ‘we just need more compute in Europe.’ But then, when I ask them, ‘what for?’ They say ‘it doesn’t matter, we just need more compute.’” Lagodinsky was quoted as saying by Politico.

It is also unclear who the facilities would be used by, according to Nicoleta Kyosovska, a research assistant at a Brussels-based think tank. She described the planned datacenters as “cathedrals in the desert,” noting that Europe has only one AI company capable of using such infrastructure – the French startup Mistral, which is already building its own data centers.

A Commission spokesperson has defended the plan by arguing that Europe requires computing sovereignty to avoid dependence on other continents. 

The skepticism comes amid broader concerns over global AI overspending. Alphabet, Amazon, Meta, and Microsoft reportedly plan to spend a combined $725 billion this year on AI infrastructure.

However, Gary Marcus, a professor emeritus at New York University, has described the planned spending as the “greatest capital misallocation in history.” Tech analyst Ed Zitron has also noted that the economics of data centers “do not make sense” given that most AI startups are unprofitable and the majority of data center credit deals are rated junk grade.

Meanwhile, consumers have also been venting their anger over the global chip crisis sparked by overzealous AI development plans.

“The reason why RAM has become four times more expensive is that a huge amount of RAM that has not yet been produced was purchased with non-existent money to be installed in GPUs that also have not yet been produced, in order to place them in data centers that have not yet been built, powered by infrastructure that may never appear, to satisfy demand that does not actually exist and to obtain profit that is mathematically impossible,” software engineer Jatin K Malik surmised.

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