In this presentation, we offer a descriptive and analytical account of the impact of the “key pillar of the European Education Area” –the European Universities initiative--on the European higher education sector in light of the long-standing debate about horizontal diversity and vertical differentiation of higher education. We note that the effects of the current policy discourses of support for institutional diversity are hard to assess at this early stage. We suggest that it can be observed already, however, that the alliance formation in the framework of the initiative activated deep sociological mechanisms of hierarchisation, leading to the creation of networks of alike institutions, establishing a prestige hierarchy of European higher education institutions–albeit not a new one. Specifically, we argue that the global level stratification hierarchy cast by rankings influences both the participation of individual institutions and the formation/structure of the alliances within the initiative. However, we show empirically that some of the distinctive policy design measures, namely the requirement for broad geographical coverage and generically framed rules for participation, have also generated opportunities for involvement of the less prestigious (according to the global rankings) higher education institutions in selected alliances, thus broadening the scope of the initiative beyond the core of top-reputed research universities. We suggest that these observations may have important implications for how the intended extension of the initiative mechanism may be implemented and the effects on the overall structure of European higher education. Thomas Heinze, University of Wuppertal, has been involved as discussant.