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EU Scales Back AI Regulations to Compete with US in Global Tech Race

By  |  February 18, 2025

The European Union is adjusting its regulatory approach to artificial intelligence (AI) as part of a broader effort to enhance investment and competitiveness in the sector. According to The Financial Times, the EU is taking steps to streamline compliance requirements and reduce bureaucratic burdens on companies developing AI technologies.

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    Henna Virkkunen, the European Commission’s executive vice-president in charge of digital policy, emphasized the need to support businesses in navigating AI regulations. The Financial Times reports that she expressed the EU’s intent to ensure companies are not overburdened with excessive reporting requirements. Virkkunen highlighted that an upcoming EU code of practice on AI, expected in April, would not impose additional obligations beyond those set out in the existing AI Act.

    The AI Act, which was introduced in August last year, established a regulatory framework for AI development and deployment across the EU. While some of its provisions will take up to three years to take full effect, the Act aims to create a trustworthy AI ecosystem. As noted in The Financial Times, the legislation seeks to balance fostering innovation with addressing potential risks, such as opaque decision-making processes in AI systems that could lead to unfair treatment in employment or social benefits applications.

    Read more: Advances Bill to Strengthen Antitrust Enforcement Through AI

    Despite concerns from some within the tech industry that Europe’s regulatory environment is stifling innovation, the EU remains committed to refining its approach. According to The Financial Times, a deregulatory push is underway, but it is driven by internal economic priorities rather than external pressures from the United States or major technology firms. The report also notes that US President Donald Trump has criticized EU regulations and threatened retaliation for fines imposed on American tech companies, while some Silicon Valley executives claim that EU policies are harming their businesses. However, the EU insists that its regulatory adjustments are focused on stimulating AI investment, not responding to US political dynamics.

    The European Commission has recently taken concrete steps to boost AI investment. Earlier this week, it announced plans to facilitate €200 billion in AI funding. As reported by The Financial Times, European Commission President Ursula von der Leyen rejected the notion that Europe is falling behind in the AI race, stating, “The AI race is far from over. Truth is, we are only at the beginning… And global leadership is still up for grabs.”

    This shift towards greater AI investment is also reflected in national commitments. On the same day as the Commission’s announcement, French telecoms group Iliad pledged €3 billion towards AI development, while the French government unveiled a €109 billion AI investment strategy. These moves underscore a growing recognition within Europe of the need to compete on a global scale in AI advancement.

    Meanwhile, concerns from the tech industry persist. In September, an open letter signed by 59 technology companies, including Meta, warned that Europe risked lagging behind other regions due to its regulatory approach. The letter called for clearer, more consistent decision-making in AI regulation and greater access to European data for AI training, arguing that such measures are essential for the continent’s economic and technological growth.

    Source: The Financial Times