Two start-ups struggling to gain a foothold in the increasingly competitive artificial intelligence market said on Friday they are teaming up in a transatlantic alliance to better compete with US tech giants.
Cohere, a Canadian company founded in 2019, acquires Aleph Alpha from Germany. The governments of both countries helped facilitate the deal. The new company would aim to attract business and government customers uncomfortable with relying on American technology firms for artificial intelligence and other digital services.
Cohere and other smaller AI firms are struggling to keep pace with US companies such as Anthropic, OpenAI and Google, which have spent huge sums on talent, semiconductors and data centers. American companies are building increasingly powerful systems and reaching out to global customers. Artificial intelligence systems made by Chinese firms such as DeepSeek and Alibaba are also widely used around the world.
The dominance of American and Chinese AI companies has set off alarms in capitals around the world. Governments fear becoming dependent on foreign firms for technologies considered critical to economic and national security.
Cohere and Aleph Alpha said in a statement that their deal will provide “a sovereign alternative in an era of increasing AI concentration.” The deal values the combined company at $20 billion, said a person familiar with the deal who spoke on condition of anonymity because the value of the transaction was not public.
“We need to make sure that the power is not in the hands of a few dominant players,” Canada’s Minister of Artificial Intelligence and Digital Innovation Evan Solomon said at a press conference in Berlin, where he was joined by the CEOs of Cohere and Aleph Alpha and German Minister for Digital Affairs Karsten Wildberger.
Mr. Solomon and Mr. Wildberger said government agencies in both countries will use Cohere’s technology. Canada and Germany have forged closer technological ties as more nations form alliances to reduce dependence on American technology.
“We are creating a global leader in artificial intelligence,” said Mr. Wildberger.
Cohere’s experience shows how difficult it is for smaller AI companies to compete with larger rivals. Cohere creates technology that other businesses can use to deploy chatbots, search engines and other AI-driven products. Founded in Toronto, the company was seen as one of the few tech companies to challenge what OpenAI and others were building in Silicon Valley. His supporters included well-known artificial intelligence researchers Geoffrey Hinton, Fei-Fei Li and Pieter Abbeel.
But the company struggled to keep pace. It has raised roughly $1.6 billion from investors including US chipmaker Nvidia, while companies like OpenAI have raised much more. In a deal announced Friday, Germany’s Schwarz Group, which is Aleph Alpha’s lead investor, said it would invest $600 million in Cohere.
As the AI economy gets more complicated, the industry is starting to consolidate. SpaceX, Elon Musk’s rocket and satellite company, this week announced a deal with artificial intelligence startup Cursor that could lead to a $60 billion acquisition of the company.
