Schwarz Digits Explores Canadian Compute Expansion
MONTREAL — German firm Schwarz Digits is evaluating the addition of compute capacity in Canada as it positions itself to become a major backer of Cohere. The division, established in September 2023 by the conglomerate behind the Lidl grocery chain, aims to challenge the dominant cloud operations of U.S. technology giants through AI services, processing power, and cybersecurity offerings. Sovereignty is a central element of Schwarz Digits’ value proposition.
The firm is exploring compute opportunities in Canada to expand its sovereign technology business, drawing parallels between Canadian priorities and those in Europe, Robert Jozic, executive vice-president for disruption, said at the All In conference in Montreal. StackIt, Schwarz Digits’ cloud unit, currently operates four data centers in Austria and Germany. The company is constructing a new 240-megawatt facility in Lübbenau, Germany, with potential to scale to 1.1 gigawatts, while also leveraging telecom infrastructure through partnerships like the one with KPN in the Netherlands.
Cohere’s $600M Investment and Infrastructure Expansion
Schwarz is set to lead Cohere’s next financing round following its merger with German AI firm Aleph Alpha, committing US$600 million to the deal announced in April. Cohere plans to utilize StackIt’s AI infrastructure as part of the collaboration, which aims to create a cross-Atlantic AI champion capable of competing with OpenAI and Anthropic. The Toronto-headquartered firm recently secured seven-megawatt capacity from Bell’s British Columbia data center, highlighting its focus on scaling models in Canada and Germany.
Cohere CEO Aidan Gomez emphasized the company’s aggressive investment in compute to rival Anthropic and OpenAI, citing partnerships with Bell and StackIt as key to meeting infrastructure demands. “We’re investing heavily in compute,” Gomez stated. “We’re trying to do that as much as we can in Canada and in Germany.” Bell’s model mirrors KPN’s, allowing tenants to install hardware in its data centers, reflecting a growing trend among Canadian telcos to support AI infrastructure development.
Merger with Aleph Alpha Boosts Sovereign AI Portfolio
The firm is engaging in discussions with potential partners to build secure, high-performance digital infrastructure in Canada, though specific Canadian partnerships remain undisclosed, according to spokesperson Philipp Kloß. The merger with Aleph Alpha positions Schwarz to strengthen its portfolio, as Aleph Alpha’s AI tools already operate on StackIt’s compute. The combined entity seeks to champion sovereign AI solutions for Europe, Canada, and other markets wary of dependence on U.S. or Chinese technology.
Jozic highlighted the market demand for sovereign closed models, driven by concerns over control and cost with foreign AI providers. Industries like defense, healthcare, and public services prioritize provenance, areas where Cohere and Aleph Alpha have established client bases. The company promotes its integrated suite of cloud, cybersecurity, data, AI, and workplace tools as a European alternative to U.S. hyperscalers, with customers willing to pay premiums for sovereignty protections.
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Global Demand for Sovereign AI Solutions
The Cohere-Aleph Alpha merger accelerates the build-up of an independent AI infrastructure, according to the spokesperson Philipp Kloß. The combined entity’s partnership with Schwarz is aimed at sustainably strengthening the sovereign digital future of Europe and Canada.
The German conglomerate’s backing for Aleph Alpha and Cohere reflects a strong belief in the market for sovereign models. Amid rising costs and concerns over control when using technology from OpenAI and Anthropic, some businesses are switching to open-source AI from Chinese developers.
Countries and companies outside the U.S. and China are increasingly seeking alternatives to avoid reliance on American or Chinese technology. Customers are reportedly willing to pay premiums for sovereignty protections, Jozic stated, citing the risk of losing access to services due to foreign government actions.
The Cohere-Aleph Alpha deal follows heightened demand for sovereign AI after the Trump administration imposed controls on Anthropic’s models in June. Both Cohere and French competitor Mistral saw significant customer inquiries post-intervention.
Canada’s Role in Cross-Atlantic AI Strategy
Canada’s AI talent pool and shared sovereign priorities with Europe align with the firm’s strategy. Jozic emphasized that combining German and Canadian AI strengths positions the firm as a formidable innovator, not just a middle power.
The firm continues to explore partnerships in Canada and Germany, emphasizing its commitment to providing European and Canadian markets with reliable AI infrastructure solutions. Jozic reiterated that customers value the flexibility and control offered by Schwarz Digits’ integrated technology suite, which includes cloud, cybersecurity, data, AI, and workplace tools.
