More than half of European businesses now use AI, but fewer than a quarter have reached the most advanced stage of adoption, according to Sasha Rubel, Head of AI and Generative AI Policy, EMEA, at Amazon Web Services (AWS).
“Less than a quarter have reached the most advanced stage of adoption, using it primarily for efficiency gains, not to reinvent and innovate,” Rubel said.
Regulatory Fragmentation Named Top Bottleneck
Rubel pointed to a new independent report, Unlocking Europe’s AI Potential 2026, commissioned by AWS and produced by Strand Partners. The report found that only 31% of businesses have a formal AI strategy, and just 22% are using AI for advanced use cases. “Yet regulatory complexity is Europe’s most consequential bottleneck, taxing every other ambition,” Rubel said.
She also cited an International Monetary Fund (IMF) estimate on the cost of internal market fragmentation. “The International Monetary Fund estimates that Europe’s internal market fragmentation imposes the equivalent of a 110% tariff on innovation,” Rubel said, calling it “a structural penalty that no amount of investment in skills, compute, or infrastructure can fully overcome while it persists.”
Compliance Spending Rises, Skills Gap Persists
According to the report data cited by Rubel, European businesses now allocate 42% of their technology budgets to compliance, up from 40% in 2025. Some 41% of businesses cited fragmentation within the EU as a challenge to scaling.
More than half of respondents said AI and digital talent shortages are preventing adoption, the report found. Separately, 38% of Europe’s most innovative startups indicated they would consider relocating to scale. “When 38% of Europe’s most innovative startups also indicate they would consider relocating to scale, the signal is unambiguous,” Rubel said.
She argued that simplifying regulation carries benefits beyond compliance costs. “Simplifying the regulatory landscape would do more than simplify scaling for EU businesses — it would release the capital, talent, and confidence needed to secure Europe’s long-term competitiveness,” Rubel said.
Examples Cited: Mindflow, Iktos
Rubel pointed to two companies as examples of AI integrated into core business operations: Mindflow, which uses AI agents to automate IT and cybersecurity tasks, and Iktos, which combines AI and robotics in drug discovery.
“Mindflow is using AI agents to automate complex IT and cybersecurity tasks in seconds rather than hours, while Iktos is combining AI and robotics to accelerate drug discovery and cut development times in half,” Rubel said.
She added that public sector adoption plays a role in building confidence in the technology more broadly, saying that when governments adopt AI, “it sends a huge signal and builds public trust.”
Three Priorities For Europe
Rubel outlined three areas she said are critical for Europe to lead in AI:
- reducing regulatory fragmentation,
- investing in AI readiness through education and workforce retraining,
- and improving access to growth capital.
“Europe should be the best place to scale, not just start,” Rubel said. She added that addressing these gaps requires cooperation across sectors. “No single stakeholder can solve this alone. Governments, industry, and educators all have a role to play,” Rubel explained.
About The Announcement
Rubel’s comments accompanied AWS’s participation in GITEX AI Europe as the event’s GenAI Innovation Partner. The second edition of GITEX AI Europe ran from June 30 to July 1, 2026, at Messe Berlin, gathering 950 enterprises and startups, more than 600 investors, and over 150 speakers from more than 80 nations. The event was organized by inD, with support from the Berlin Senate Department for Economics, Energy and Public Enterprises and Berlin Partner for Business and Technology.
