Cohere Acquires Aleph Alpha: Sovereign AI at Stake

Cohere Takes Over Aleph Alpha

The Canadian artificial intelligence company Cohere has recently announced the acquisition of the German startup Aleph Alpha, based in Heidelberg. This deal, which values both companies at around $20 billion, marks a significant turning point in the AI landscape. The Schwarz Group, known for its Lidl and Kaufland brands, plays a crucial role by investing $600 million and providing the necessary cloud infrastructure through its STACKIT platform.

The acquisition emphasizes the development of sovereign AI, a concept where governments and regulated industries can maintain complete control over their data. This strategic direction is supported by the German and Canadian governments, who see this merger as an opportunity to offer an alternative to global tech giants.

Cohere and Aleph Alpha: A New Era

Cohere, the larger of the two companies, will retain its name and operate with headquarters in both Canada and Germany. Neither company has specified whether the Aleph Alpha brand will survive in any form. The agreement still requires approval from Aleph Alpha's shareholders and regulators. According to CNBC, Aleph Alpha shareholders will receive one share of Cohere for every nine shares they hold.

Political Support from Berlin and Ottawa

The acquisition benefits from significant political support. Canadian AI Minister Evan Solomon highlighted the mutual advantages of this merger, stating that the goal was to ensure that governments and businesses have an option between hyperscalers and hegemons. The German Digital Ministry described the agreement as having high geostrategic and economic value, planning to act as an anchor client and prioritize sovereign AI solutions in public procurement.

Aleph Alpha: From Hope to Acquisition

Once seen as Germany's answer to OpenAI, Aleph Alpha has undergone significant changes leading up to this acquisition. Founded in 2019 in Heidelberg, the company raised over $500 million in a Series B funding round at the end of 2023, backed by the Schwarz Group, Bosch Ventures, SAP, and HPE. This funding round was not entirely equity-based but also included commitments related to research, business, and licensing.

In September 2024, the company shifted its focus. Instead of continuing to invest heavily in the race for ever-larger language models, Aleph Alpha repositioned itself around its PhariaAI platform, a "operating system for generative AI" capable of integrating third-party models. Founder Jonas Andrulis argued at the time that building a purely European language model was no longer a viable business model.

Change in Leadership and Restructuring

The Schwarz Group, already holding a 20% stake in Aleph Alpha through Schwarz Digits, strengthened its influence over strategy and personnel. In August 2025, Reto Spoerri, former head of online business at Lidl, joined as co-CEO alongside Andrulis. In October 2025, Jonas Andrulis had to completely step down from his role as CEO and was proposed for a seat on the advisory board. Ilhan Scheer, former growth director and ex-Accenture employee, was appointed as the second co-CEO.

In early 2026, Aleph Alpha cut around 50 positions, and Andrulis told NZZ that he was out for good: "I'm out." NZZ reported that he had been pushed out, although Andrulis declined to comment on the new direction or the influence of the Schwarz Group. Shortly after, he announced a new AI startup with consulting firm Roland Berger.

European Dependency Highlighted

For years, German media has portrayed Aleph Alpha as Europe's answer to OpenAI, but the company has never lived up to expectations. Part of the problem dates back to early calls for European alternatives to GPT-3 that fell on deaf ears in 2019. The EU and the German government did not act for years, and in the meantime, OpenAI, Google, and Anthropic had already divided the market.

Germany and the EU are still paying the price for this slow response. A Canadian company buying one of the most promising hopes of German AI makes this dependency harder to ignore than any strategic document. Aleph Alpha brings existing contracts with the German Digital Ministry and the government of Baden-Württemberg, which, according to a source close to the projects, is a major asset for Cohere.