Cohere, Aleph Alpha plan transatlantic sovereign AI tie-up

Cohere and Aleph Alpha plan to combine in a transatlantic sovereign artificial intelligence venture, backed by a USD $600 million structured financing commitment from Schwarz Group companies tied to the deal.

The proposed tie-up would join Canadian AI company Cohere with Germany-based Aleph Alpha. The combined entity would be anchored in Canada and Germany and focus on governments and regulated industries. The transaction remains subject to approval by Aleph Alpha shareholders and the relevant authorities.

Schwarz Group's financing commitment is intended to support Cohere's upcoming Series E funding round, in which it plans to act as lead investor. The combined business would also work with Schwarz Group's cloud unit, STACKIT, to deploy a sovereign offering.

The move reflects intensifying competition to build AI systems that can be hosted and governed under local rules, particularly in public administration, finance, defence, energy, manufacturing, telecommunications and healthcare.

Businesses and governments in Europe and elsewhere are increasingly seeking alternatives to a small number of US-based technology providers for core AI infrastructure and models.

Cohere has built its business around large language models and software for corporate users, while Aleph Alpha has focused on the European market and public sector customers, emphasising sovereignty, transparency and regulatory compliance. Together, the companies say, they would combine engineering and computing resources across two G7 countries.

The market opportunity is large. Citing McKinsey research, the companies said AI services are projected to exceed USD $1 trillion a year, with sovereign AI demand accounting for nearly USD $600 billion of that total.

Aidan Gomez, Cohere's co-founder and chief executive, said the deal would extend the company's reach in sovereign AI.

"Organisations globally are demanding uncompromising control over their AI stack. This transatlantic partnership unlocks the massive scale, robust infrastructure, and world-class R&D talent required to meet that demand," Gomez said. "We will give enterprises and governments across Canada, Europe, and the world the technology to move from exploration to rapid, secure implementation, with the absolute certainty that their data remains their own."

Aleph Alpha has sought to position itself as one of Europe's domestic AI developers as policymakers in the region push for greater control over strategic technologies. Founded in Heidelberg, the company employs about 200 people across four locations in Germany.

"We develop specialized large language models for Europe without compromising on Sovereignty, Transparency and Regulatory Compliance. By living this responsibility, we serve as a trusted and strategic partner to public sector and enterprise customers in Europe," said Ilhan Scheer, Aleph Alpha's co-chief executive. "Together with Cohere, we are building a real counterweight for organizations that refuse to outsource control over their AI to a single provider or jurisdiction."

Schwarz Group's involvement adds a major industrial backer with a significant digital infrastructure business. Through Schwarz Digits, the group has built STACKIT as a cloud platform designed around German data protection requirements. It would serve as the technical base for the sovereign AI offering.

The backing gives the transaction a strategic dimension beyond financial support. Schwarz Group, best known internationally for its Lidl and Kaufland retail businesses, has expanded its digital operations as concerns over data control and infrastructure dependence have grown more prominent in Europe

Cohere said it has previously raised about USD $1.6 billion from strategic technology investors, institutional backers and AI researchers. The new financing would come as investors continue to pour large sums into AI companies, while governments and corporate customers press suppliers to offer systems that meet domestic legal and security requirements.