TORONTO — Cohere’s deal for Aleph Alpha gives the Canadian AI firm a crucial foothold in Europe and the scale for global competition, just as governments and businesses increasingly worry about who controls the technology on which they rely. 

“There’s a real appetite right now for sovereign AI,” Cohere’s chief AI officer Joelle Pineau told The Logic. Governments want as much of the technology and infrastructure in domestic hands as possible, while companies want to ensure they’ll always have access to critical systems, she said. Cohere and Aleph Alpha see “the same opportunity” to supply that demand. 

The Canadian and German governments both blessed the deal, and promised on Friday to continue supporting the combined firm. Cohere recently landed its first significant federal contract with the Innovation Department, and has been looking to sell to the Canadian Armed Forces. The German military already uses Aleph Alpha’s technology.  

“The geopolitical realignment and the technological revolution has created new opportunities and new markets,” AI Minister Evan Solomon told The Logic. By combining with Aleph Alpha, Cohere will reach the scale that lets it provide a viable option for governments and businesses caught between “either a hyperscaler or hegemon,” he said. Prime Minister Mark Carney’s much-cited Davos speech calling for more middle-power co-operation used the same phrase to describe the choice between U.S. tech giants and China.   

At a press conference about the deal in Berlin on Friday Solomon called Cohere “an essential tech company in the world.” 

The German opportunity

For now, the deal will further Cohere’s aim to become an essential tech company in Germany. The firm could have sold its sovereign AI products to German customers from Canada, but doing so presents challenges. Pineau said the firm still requires engineers on the ground in new markets with local know-how to tailor software and systems to clients’ needs.

Cohere already has some technical staff in Germany. Adding Aleph Alpha’s team will give the Canadian firm more local market knowledge, R&D expertise and customer relationships in the country, Pineau said. “It’s just a much faster way to scale the company in the region.”

The deal also brings Cohere a significant German investor, ally and potential customer in the form of the Schwarz Group. The Neckarsulm-headquartered conglomerate—which owns the Lidl discount grocery chain—has committed US$600 million to Cohere’s forthcoming Series E financing round. Its Schwarzes Digits division is making a play to be the Amazon Web Services of Europe.

The Digits division includes cloud and data services firm StackIt, via whose infrastructure Cohere plans to sell a sovereign AI solution. Schwarz has already rolled out Aleph Alpha’s AI tools across its operations.

As Cohere grows, it’s trying to develop technology tailored to the needs of specific industries, rather than general business use cases, according to Pineau. It sees opportunity in Germany’s globally significant manufacturing and biotech sectors. In Canada and other markets, Cohere has won business in financial services, telecom and IT.  

The business of sovereignty

The deal is “a watershed moment for both Cohere and for the middle powers,” said Patrick Pichette, a partner at Inovia Capital who co-led the AI firm’s September 2025 US$600-million funding round. For the last 50 years, the tech world has largely followed U.S. standards, according to Pichette, a former top executive at Google. That’s helped make U.S. software the plumbing of the internet, and of the global economy.

AI re-opens the competition. The Cohere-Aleph Alpha deal means “there might actually be a non-U.S., non-China infrastructure for the world for the coming 50 years,” Pichette argued. The sovereign AI market will include governments equipping their intelligence and defence forces, but also utilities and banks that care about where their data is processed—“the stuff that makes the world work,” he said. 

Cohere and Aleph Alpha have both targeted the enterprise market, betting that businesses would want tailored versions of both the AI models and generative tools sweeping the economy. That space has grown increasingly contested, with OpenAI and Anthropic launching successful versions of ChatGPT and Claude for businesses. The two San Francisco-based firms dwarf the rest of the AI field in terms of fundraising, valuation and revenue.

Pineau said the Cohere-Aleph Alpha deal isn’t simply a reaction to competition from OpenAI and Anthropic. “Cohere made the right bet before it was the right bet,” she said, adding that enterprise-focused firms take longer to scale because it’s harder for them to sign up customers than those chasing the general public.

Scaling up

Cohere is also facing fierce competition for top AI talent. OpenAI, Anthropic and Silicon Valley giants like Google and Meta are throwing around huge sums to hire star researchers. Landing Pineau herself last August was a coup for Cohere; she’d previously led Meta’s network of AI labs. By combining with Aleph Alpha, the firm adds great AI skills in bulk, Pichette said. “These are the best of the best in terms of researchers and practitioners.”

Several Canadian software firms have used an acquisition or rollup strategy to expand into new geographies or sectors, adding ready-made technology capabilities or products via dealmaking. Examples include OpenText in information management, Lightspeed in point-of-sale systems  and Dayforce in payroll. 

Pineau said it’s premature to say whether Cohere will keep Aleph Alpha’s technology and integrate it into its own AI systems. The two firms will spend the next few months “digging down into the code,” she added. Cohere isn’t necessarily looking to adopt a rollup strategy, but will use what it learns during the combination with Aleph Alpha to inform any future deals, she said. “If it goes well, absolutely we should repeat.” In other markets, Cohere may opt for deals like its co-development partnerships with LG CNS in Korea and Fujitsu in Japan. 

What comes next 

Solomon and German Digital Transformation Minister Karsten Wildberger announced a new Canada-Germany Digital Alliance in December, with a particular focus on AI and sovereignty. Ottawa has signed plenty of such co-operation agreements over the years. The Cohere-Aleph Alpha deal provides proof from the private sector that it’s more than words, according to Solomon. He added that Germany and Canada have “a very healthy pipeline of projects” to advance the alliance, including in areas like AI research, investment and safety.  

While others are declaring the AI race already won, Cohere sees plenty of room to run. “The market for AI is so vast, it would be crazy to just cede it to the U.S. giants right now,” Pineau said. “Especially in this particular time where the appetite for sovereign AI is very high.”