This post is pretty useless without knowing what version of the game you're playing.
I'm about 80 turns into a French campaign, myself, at the moment, using the Retrofit mod on normal, and I've had a "Very Good" marriage alliance with the Empire for almost that entire time.
At the moment, a very solid block of me, the Empire, Milan, Hungary, and Scotland, are battling it out against the equally solid alliance of England, Denmark, Poland, and Venice.
Spain and Portugal are embroiled in their own little pissing contest, and leaving everyone alone, while Russia and the Middle East contend with the Mongols.
So far, so good.
I share a lengthy border with the Empire and Milan, and am easily the most powerful faction thanks to my Outremer holdings, and my alliances still hold.
I've even seen some impressive moves out of the AI.
For instance, the moment I started threatening moves on Caen, England rushed to make an alliance with the Denmark/Poland crowd, hoping to save their butts.
They didn't, but it was a good move.
Heck, Egypt even went out of their way to offer a cease-fire with me!
So I'm thinking that maybe the answer to your question- "what am I doing wrong here"- is, "not upgrading"?
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