The bubble pops, Clippy sends the bill

If you exclusively read or listened to European tech media these days, you’d think European digital sovereignty had only one problem: the lack of home-grown frontier AI and data-centres.

Across the pond, the AI numbers are looking more worrying by the day, though; and the risk of OpenAI going belly up is no longer theoretical.

The bubble popping itself wouldn’t affect European businesses directly (the economy is another story). Chatbots would stop yammering and people would have to start doing things manually again, pay through the nose, or use open-weights models.

But, let’s talk about Microsoft.

Microsoft is heavily invested in OpenAI via infrastructure, purchase commitments, etc; its tentacles are everywhere. If OpenAI failed, Microsoft would face a major write-off. We’re talking $250 billion in commitments alone.

Now, for many organisations, Microsoft 365 is the backbone of their business: email, calendars, identity, storage, etc. Take it away and the consequences would be bad and far more immediate than if some chatbot took a dirt nap.

Microsoft could easily take advantage of that dependency to compensate, at least partially, for the OpenAI shock. They could raise prices at renewal, kill discounted plans (they’re willing to do that with devastating effects), move functionality into more expensive bundles, and enshittify the whole stack.

Their customers don’t need to be legally prevented from leaving for lock-in to work. Migration can just be too scary or disruptive. So the price increase gets eaten.

We should stop worrying about European AI so much and worry about whether we can walk away from US Big Tech when they start compensating their generative AI losses by taking advantage of lock-in.

(And we can scoop up cheap GPUs for "sovereign AI" from the fire sale if we still want to go down that route)

Colin