Forget regulations, would it make sense for Europe to train a frontier model of it's own? Would it be sufficiently better than fine tuning a Chinese model? Would it actually be competitive with US frontier models? Would enough people pay to use it even within Europe to pay for the training costs? Do we have enough inference capacity that enough people /could/ use it? Would being "European" allow any governments in Europe to trust it, rather than deciding that actually there needs to be a French, German, Italian, Spanish and UK sovereign AI?

I am guessing that enough of these questions can be answered with "no" that nobody really wants to invest.

For the same reason there isn't really a serious third start up competitor to OpenAI and Anthropic.