Hey Everyone,

Aleph Alpha was my favorite LLM builder in Germany with high ethical standards. Unfortunately like I have been predicting, many of these smaller firms can no longer keep up. However it was never really that profitable - for instance, up until recently it sold large language models to enterprises and governments and it was posited as the German answer to OpenAI — raked in just €945k in revenue for the full calendar year of 2023. That’s double 2022’s revenues, which amounted to €426.5k.

If you don't live in Europe, this news is not a big deal. But Aleph Alpha was one of the EU's biggest hopes to keep building LLM according to their ethical code of conduct. Europe doesn’t have many large language model (LLM) makers and the same fate could be waiting for Mistral in France eventually, AI21 Labs in Israel, Cohere in Canada, and so on. So much for Sovereign AI, a concept the likes of Nvidia had been pushing. As the cost to scale compute in AI supercomputers goes up to train the models, fewer smaller names can afford to be still in the frontier model game.

German LLM maker Aleph Alpha pivots to AI support

To me this signals basically the end of the company. Don't get me wrong, Pharia is interesting.

Last year Aleph Alpha had raised an investment in excess of $500 million from the country’s industrial giants and one of its richest tycoons, cementing it as Europe’s greatest hope in developing advanced AI independent of Silicon Valley. But that was never grounded in reality. Europe is now going to take a definitive back seat in Generative AI LLMs to the U.S. and China.

• After it was founded in 2019, Aleph Alpha quickly became the poster child for generative AI in Germany, but now it's already failed just five years later.
• It joins many other Generative AI startups that have been acquired or exited the race in 2024.

Bloomberg indeed reported: "Last week, Aleph Alpha announced a new strategy centered around its latest product, PhariaAI, an “operating system for generative AI.” It’s effectively software to help corporate and government clients use AI chatbots and tools, regardless of whether the underlying technology was made by Aleph Alpha or one of its rivals."

So it's the end of an era for Aleph Alpha and Germany which has preciously few LLM startups. Germany that is supposed to be the driving economy of the EU. It's very symbolic as VW is having its own issues with the onslaught of Chinese EV makers.

Who knows whether this new pivot of Aleph Alpha is even viable. As OpenAI gets cozy with the Feds and the Pentagon, it may also take a rather Palantir-esque route and disrupt the market Aleph Alpha appears to be going after.

Aleph Alpha says it will "still" develop large-language models, or LLMs — the systems that underpin products like ChatGPT — but they’re no longer the centerpiece of its commercial strategy. Nor is it trying to outperform models from firms such as OpenAI or Meta. For all intents and purposes, the EU has lost in LLM building and will likely not have much say from this point onwards.

We knew this day would come, just not how quickly. A lot has changed from late 2022 to 2024. The EU's AI Act and less access to funding has hampered their ability to keep up in AI in a quickly changing world.

As much as I respect the approach of Aleph Alpha in LLMs in terms of ethics & trust and saftey, their impact going forwards is likely to be extremely limited. The shift makes Aleph Alpha the latest high-flying AI startup to change course in a field increasingly controlled by a few well-capitalized giants and a furious race to larger AI Supercomputers needed in order to compete. These also costs several Billions of U.S. dollars.