At the Techarena Tech Conference in Stockholm, Sweden, executives from Google and Meta voiced strong concerns over Europe’s strict regulatory approach to artificial intelligence (AI), arguing that it is hindering innovation and economic growth.
Chris Yiu, Meta’s director of public policy, criticized the AI Act and General Data Protection Regulation (GDPR), describing them as regulatory frameworks that either fragment the market or impose excessive restrictions, ultimately causing delays in product launches and limiting technological progress.
“This is a profound and very human application of the technology, and it is slow to arrive in Europe because of the issues that we have around regulation,” Yiu said, holding up a pair of Meta’s AI-powered Ray-Ban Meta glasses that provide real-time speech translation and image descriptions for visually impaired users.
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The glasses, which launched in other markets months earlier, were delayed in Europe due to the complex regulatory landscape surrounding AI and data privacy laws.
Meta previously warned that the unpredictable nature of the AI Act’s implementation was creating compliance challenges, while the GDPR framework had prevented the company from using Instagram and Facebook user data to train its AI models. Google DeepMind’s head of public policy, Dorothy Chou, added that the AI Act was devised before the rise of ChatGPT, highlighting the difficulty of regulating AI on a timeline that does not match the technology’s pace of development.
Chou pointed to the U.S. Inflation Reduction Act as an example of a policy that fosters economic growth while providing a regulatory framework for emerging industries. She noted that, in contrast, Europe’s regulatory environment has been largely focused on imposing restrictions rather than incentivizing innovation. She argued that policymakers should strike a balance between ensuring responsible AI development and creating an environment where the industry can thrive.
Trump’s Trade War Puts Europe Under Pressure
The push for AI deregulation in Europe is not just coming from tech executives; economic analysts are also urging policymakers to rethink their approach in light of U.S. President Donald Trump’s aggressive trade policies. With Trump reigniting tariff wars against major economies, including China and the European Union, experts believe that European leaders will be forced to scale back regulatory burdens to strengthen their economies.
Trump’s trade war strategy, which includes higher tariffs on European goods and manufacturing components, is expected to hurt industrial output and weaken economic growth across the bloc. Analysts note that the EU cannot afford to further slow down its tech sector with restrictive AI rules at a time when economic resilience is critical. If Europe fails to incentivize domestic innovation, it risks losing a large ground to the U.S. and China, where AI regulation is either more flexible or heavily state-driven.
Economic analysts have warned that if Trump follows through with trade barriers on European products, the EU will need to offset potential losses by boosting its own technology sector. AI-driven growth could serve as a key pillar of economic recovery, making it imperative for European policymakers to adopt a more innovation-friendly approach.
The Ukraine Crisis and Europe’s Growing Financial Burden
Beyond trade tensions, another pressing issue weighing on Europe’s economic outlook is the ongoing war in Ukraine. With Trump signaling a potential withdrawal of U.S. financial support for Ukraine, the EU is expected to step up and fill the financial gap left by Washington. This shift will place enormous fiscal pressure on European economies, forcing governments to allocate more funds toward military aid, humanitarian assistance, and post-war reconstruction efforts.
The EU has already committed tens of billions of euros in financial aid to Ukraine, but with no end in sight to the war, the cost of supporting Kyiv will continue to rise. If the U.S. drastically reduces its funding, the EU will have no choice but to shoulder a greater portion of the financial burden. To sustain this long-term commitment, European leaders will need to find ways to strengthen the economy, ensuring they have the resources to maintain aid flows without risking a domestic economic slowdown.
Economists believe that the AI sector could play a crucial role in boosting Europe’s overall economic resilience. The potential of AI-driven industries to create jobs, increase productivity, and attract foreign investment makes it an essential component of any strategy aimed at sustaining financial stability. However, the strict AI regulatory framework currently in place could prevent European businesses from capitalizing on these opportunities, putting the bloc at a disadvantage compared to global competitors.
An EU policy advisor suggested that European lawmakers will likely be forced to reconsider their stance on AI regulation, not necessarily because of pressure from corporations, but because of the broader need to keep Europe’s economy competitive and capable of handling future geopolitical challenges. While the AI Act was originally designed to mitigate potential risks associated with artificial intelligence, its restrictive nature is now viewed as a possible hindrance to economic recovery and technological leadership.
Big Tech and the Push for Softer Regulations
As economic and geopolitical factors mount, Big Tech companies have intensified their lobbying efforts to push back against Europe’s AI regulations. Google’s president of global affairs, Kent Walker, recently described the EU’s General-Purpose AI (GPAI) code of practice as a step in the wrong direction, arguing that it places unrealistic compliance expectations on companies.
Meta’s newly appointed Chief Global Affairs Officer, Joel Kaplan, also criticized the AI code, calling it unworkable and technically unfeasible. He argued that some of its requirements go beyond the AI Act itself, adding another challenge for companies trying to launch AI-powered products in Europe.
The EU’s newly created AI Office, responsible for overseeing AI compliance across the region, is now facing intense pressure from both U.S. tech giants and European venture capitalists who warn that overregulation could stifle Europe’s own tech ecosystem.
Several European investors and startup founders have also expressed frustration over the regulatory compliance burden in the region. Antoine Moyroud, a partner at Lightspeed Venture Partners, said that while the U.S. government has taken steps to support AI growth, Europe has focused too much on regulation rather than fostering a competitive industry.
Moyroud noted that Europe needs to go beyond the AI Act and GDPR to create an environment where AI companies can thrive. Without a major shift in regulatory philosophy, he warned that the EU risks falling behind in the global AI race, with most of the breakthrough innovations happening in Silicon Valley and China.