Microsoft’s CEO said Monday that his company is increasingly looking to Europe as a key region for its artificial intelligence strategy, as the continent seeks to bolster digital independence from the United States and China.

“We are investing in Germany, in the European Union with our capital, putting it at risk,” Satya Nadella said during an interview on the MD Meets podcast, hosted by Mathias Döpfner, the chair and CEO of Axel Springer, the German media group that owns POLITICO.

“These are not AI factories or cloud factories that sit in the United States. They are in the continent and in the country,” he added.

In the conversation, Nadella stressed that digital sovereignty is a critical consideration for any nation.

“I think that every country, whether it’s at the European Union level or at the country level, like in Germany, I think sovereignty is an important consideration,” he said. “So every country would like to ensure that there is continuity of their supply, there is resilience in their supply. And there’s agency in which they operate. And that’s one of the reasons why we have made all these commitments.”

Nadella said that true sovereignty goes beyond infrastructure. “The new chapter of sovereignty is … what is a German automaker or a German industrial company? How are they going to have their own AI factory and foundation model that is unique to them?” he said. “That is, to me, the true definition of sovereignty.”

Nadella’s comments come as European leaders increasingly warn that the continent cannot afford to cede the “digital sphere” to the global superpowers of the U.S. and China without serious consequences.

At the Digital Sovereignty Summit in Berlin on Nov. 18, Germany and France unveiled a series of initiatives aimed at strengthening European technological independence, spanning cloud services, AI and public procurement. Among the measures were commitments to favor European solutions in public contracts, safeguard European data from foreign surveillance and confront the market dominance of major U.S. cloud providers.

“If we let the Americans and the Chinese have all of the champions, one thing is certain: we may have the best regulation in the world, but we won’t be regulating anything,” French President Emmanuel Macron warned.

Nadella acknowledged China’s strength in human capital and open-source innovation but stressed the continued leadership of the U.S.

“The United States still continues to lead, whether it’s on the AI systems or whether it is the frontier models or the AI products around the world,” he said. “It is not just the ingenuity of the American tech sector, but also the American tech stack being the most trusted tech stack in the world.”

Nadella argued that Europe could emerge as a major winner in the global AI landscape if it focuses on actually implementing and spreading the technology across industries.

“Quite frankly, the country that is going to really win is going to be the one that can scale up broadly on AI, use AI broadly in their economy, in their health sector, in their manufacturing sector, in the education sector, and grow their economy,” he said.

“Germany or Europe could be the big winner as long as they do the hard work of actually getting the technology in, re-skilling, using that technology,” he added.