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As Europe has dialed up its oversight of the tech sector, industry leaders in the U.S. have often cast the continent as a cautionary tale of what happens when governments stifle innovation. After all, they have pointed out, most of the biggest tech giants are American.
Here comes support from unexpected quarters.
A report released Monday by the European Union sharply criticized how the bloc’s regulation has hindered competitiveness, particularly in digital markets, offering Silicon Valley giants new ammunition in their fight against more stringent enforcement.
The long-anticipated report, written by former European Central Bank president Mario Draghi at the request of the European Commission, calls for major overhauls to the EU’s approach to industrial and competition policy and for significant investments into its tech sector.
The report argues that while Europe does not lack ideas or entrepreneurs, “innovative companies … are hindered at every stage by inconsistent and restrictive regulations.” And it attributes much of the “productivity gap” between the EU and U.S. to the tech sector, warning that “the EU’s regulatory stance towards tech companies hampers innovation.”
“Europe must profoundly refocus its collective efforts on closing the innovation gap with the U.S. and China, especially in advanced technologies,” wrote Draghi, an Italian economist and former prime minister.
The report also takes aim at Europe’s sprawling AI law, the AI Act, and its watershed privacy rules, the General Data Protection Regulation, warning that “their complexity and risk of overlaps and inconsistencies can undermine developments in the field of AI.”
Industry leaders including Elon Musk hailed Draghi’s report as a welcome corrective on the EU’s regulatory posture, which has increasingly targeted such U.S. tech giants as Google, Apple and Meta — as well as Musk’s X.
Mario Draghi’s critique is accurate.
— Elon Musk (@elonmusk) September 9, 2024
A thorough review of EU regulations to eliminate unnecessary rules and streamline activity in Europe would revitalize growth and strengthen competitiveness.
Things should be default legal, rather than default illegal. https://t.co/NQQom5OYIS
“The Europeans are taking a step in the right direction towards learning the lessons of history, how we’re going to win with the AI revolution if we missed the digital revolution,” said Joseph Coniglio, director of antitrust and innovation at the Information Technology and Innovation Foundation.
Coniglio, whose Washington think tank advocates for light-touch regulation and receives funding from tech companies and philanthropic groups, said he hoped proponents of more stringent antitrust enforcement in the U.S. would take cues from the report and “keep American policy on the path that it’s been, which is much more … conducive to promoting innovation.”
The report could play a major role in shaping the bloc’s approach to tech regulation moving forward, with European Commission President Ursula von der Leyen saying Monday that it would “inspire our work for the months and years to come.”
Matt Stoller, a prominent critic of the tech giants and director of research at the advocacy group American Economic Liberties Project, said government leaders should dismiss Draghi’s findings. And he disputed the notion that Europe has been overly aggressive on tech regulation.
“Europe hasn't been aggressive. They've been annoying … It’s not like they’ve done anything to change the market structure,” he said.
Stoller argued government leaders should not put too much stock into an analysis of the tech sector by Draghi, given his background primarily in banking and finance.
“I think you should start with the empirical reality [namely the tech sector] and not a high-level theoretical view from a central banker who doesn’t know anything,” he said.
From our notebooks
The Commerce Department is weighing new transparency rules for powerful AI systems
The Commerce Department on Monday said it is developing rules to audit the capabilities of advanced AI systems and computing clusters, amid concerns that the technology poses a threat to national security, my colleague Cat Zakrzewski reports for the Tech Brief.
The agency is considering regulations that would require companies to report cybersecurity measures and outcomes from “red-teaming” exercises, which include testing for whether the technology can be used to create weapons. The proposed regulations come as agencies across the federal government are crafting new AI rules, including many that were directed by last year’s artificial intelligence executive order.
“This proposed rule would help us keep pace with new developments in AI technology to bolster our national defense and safeguard our national security,” Secretary of Commerce Gina M. Raimondo said in a statement.
Government scanner
News publishers in spotlight at Google’s latest monopoly trial (Eva Dou and Salvador Rizzo)
Trump claims Zuckerberg said he couldn’t vote for Democrat in this election; Meta denies it (The Hill)
Australia plans social media minimum age, citing mental health concerns (Michael E. Miller)
Apple, Google must pay billions in back taxes and fines, E.U. court rules (Ellen Francis and Cat Zakrzewski)
Hill happenings
Inside the industry
Everything Apple unveiled at the iPhone 16 event (Chris Velazco and Tatum Hunter)
Workforce report
Daybook
- The House Energy and Commerce Committee holds a hearing, “From Introduction to Implementation: A BEAD Program Progress Report,” Tuesday at 10:30 a.m.
- The Senate Homeland Security Committee holds a hearing, “The U.S. companies’ technology fueling the Russian war machine,” Tuesday at 3:30 p.m.
- Design it for Us launches a “campus tour” at universities on Wednesday at 1 p.m.
- FTC Chair Lina Khan participates in a fireside chat at the Fordham Antitrust Law and Policy Conference, Friday at 9:50 a.m.
- The Center for Democracy and Technology holds an event, “The Future of Speech Online 2024: AI, Elections, & Speech,” next Monday and Tuesday.
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