Tech regulation in Europe: are citizens missing out?

Efforts by the European Union to regulate Big Tech as much as possible are admirable, but some balance is needed. Otherwise, the bloc risks being left behind as the world leaps onto the next stage of major tech advances.

In the world of hungry orcs and insidious wizards crafting magic weapons, be a Hobbit. Settle in peaceful Hobbiton, don’t worry about what’s going on beyond the borders of the Shire, and live out your days next to rolling hills and lush green pastures.

I’m sure this isn't how the European Commission imagines the old continent appears when it pushes strict regulation onto tech companies. But it does, and I fear that the strategy hampers innovation in the EU and simply weakens it.

Let’s not forget that the gloomy events on Tolkien’s Middle Earth eventually sucked the Hobbits in, and the Shire, defenseless against Saruman’s lackeys, burned. Spoiler alert – it survived in the end, but hey, European leaders don’t seem to have a Gandalf in their midst.

What’s probably more important, all these complex compliance rules could actually stifle competition. Meta, Google, and Amazon will always be able to foot the bill for whatever fees and fines will be thrown at them – but will smaller firms and startups?

The Commission seems a bit slow to grasp this, and if there’s a plan, it’s yet to be detailed. Meanwhile, Silicon Valley and indeed the world is moving on – even if the race seems quite reckless, in battle, it’s always better to hold a position on a hill, not at the foot of it.

Where’s that compromise?

Here at Cybernews, we’ve been writing a lot about Threads, a Meta microblogging app designed to compete with and, naturally, kill off Twitter – the veteran platform being rebranded as X by its owner Elon Musk.

The funny thing is, Threads is still not available in the EU which is where we’re based. That’s right: an app that registered 100 million users in five days is yet to launch in a key market with over 400 million potential users.

It’s annoying, personally. Yes, the EU is probably right in not budging and wanting to make sure that Meta follows European law – the Digital Markets Act’s Article 5.2 prevents tech companies from the “cross-use” of data between platforms without user consent.

Threads is directly linked to Instagram, and the latter’s user data is automatically transferred over to the new app. This is illegal under the DMA. Meta will have to allow a Threads account to be made without having a prior Instagram profile.

Don’t get me wrong, I really care about my online data. I read (try to) user license agreements, check out permissions my apps have, I use a password manager.

Meta headquarters. Image by Shutterstock.

But I wish Meta and the EU could find some sort of compromise – protect my data but give me some digital wizardry. I don’t want to miss out. I can feel that too much technology isn’t really good for my wellbeing but I can’t help myself.

There are loads of cool tech products and inventions available in the US but not in Europe: the Pandora online radio, Lyft, the ride-sharing app. Many gadgets are obtainable but, again, do not offer the same level of experience.

The problem of unintended consequences

The EU enjoys it when headlines around the world hail its privacy laws as flagship, as top-notch. The Commission seems quite sure that its digital playbook will induce others to follow its lead.

But the American tech giants, at least initially, said: no thanks. When Google released Bard, its answer to OpenAI’s ChatGPT bot, it said the new tool wouldn’t be available in the EU, either.

It is now, however. But Google still managed to suggest that it would be great to release their product in the EU but for those pesky rules and the risk of fines. Of course, it’s lobbying tactics, and it’s working.

When Sundar Pichai, chief executive of Alphabet, Google’s parent company, visited Brussels in late May, he claimed that his firm was open to more regulation – but only as long as it didn’t stifle innovation. Who would argue with that?

Again, the internet cannot be the Wild West, and Thierry Breton, European Commissioner for Internal Market, is right in pointing that out. But nor should it be a supposedly safe haven against all things new – good or bad.

The EU enjoys it when headlines around the world hail its privacy laws as flagship, as top-notch. The Commission seems quite sure that its digital playbook will induce others to follow its lead.

Consider the EU’s General Data Protection Regulation (GDPR), implemented in 2018 and aiming to give users more control over their data. It has been hailed as a landmark piece of legislation, and total fines levied under GDPR topped €4 billion ($4.4 billion) this year.

But this kind of attention to consumer privacy was always going to mean less quality and competition in services, even if this is more a problem of unintended consequences. Already in 2021, Harvard Business Review (HBR) wrote that startups and small companies have found themselves at a serious disadvantage against large firms.

“Research shows that GDPR led to an increase in relative concentration in the web technology vendor market by 17%, and that websites are now 15% less likely to share personal data with small web technology providers in favor of bigger providers,” HBR said.

“GDPR has also negatively impacted growth of AI startups with customers in Europe, and reduced investments in European tech startups.

Too cautious, too slow

Again, the consumer is missing out in the end. And it’s only an illusion to think that advancements in generative AI are not directly affecting EU citizens.

There has been a massive push to regulate AI in Europe. In spring, the EU introduced the AI Act to regulate the usage and expansion of AI technologies – it would ensure that AI systems used in the EU are “safe, transparent, traceable, non-discriminatory, and environmentally friendly.”

Now, this is commendable. Controlling innovation in AI systems needs to be done very carefully because machines are quick learners and we, the masters, may soon become the students (or maybe not).

But, again, some balance is lacking. If Europe is too careful and too slow, it will see AI breakthroughs woosh by in the US, China, or Russia – a sort of AI-based nuclear parity would then be hard to achieve, and Europe would become less secure.

Dozens of Europe’s largest companies, including Germany’s Siemens and France’s Airbus, have already spoken out against the AI Act, saying that the rules risk harming competitiveness yet fails to deal with potential challenges.

An open letter was signed by more than 150 executives and said that AI offered the continent’s businesses the “chance to rejoin the technological avant-garde.” There’s even language mentioning the “catastrophic consequences” of the AI Act.

Sure, when even Heineken, the famous brewery, signs such a letter, it sounds a bit over the top. But the EU, which keeps talking about leadership and so-called strategic autonomy, really needs to step up its game.

An AI arms race

That’s because an AI arms race is already underway. Just take a look at what Alexander Karp, CEO of Palantir Technologies, a firm that creates data analysis software and works with the Pentagon, had to say in an op-ed called “Our Oppenheimer Moment: The Creation of AI Weapons.”

“The choice we face is whether to rein in or even halt the development of the most advanced forms of artificial intelligence, which some argue may threaten or someday supersede humanity, or to allow more unfettered experimentation with a technology that has the potential to shape the international politics of this century in the way nuclear arms shaped the last one,” writes Karp.

He agrees that “the potential integration of weapons systems with increasingly autonomous artificial intelligence software necessarily brings risks.” But adds: “We must not, however, shy away from building sharp tools for fear they may be turned against us.”

The reason, simply put, is pure geopolitical reality. Adversaries struggling for power will do almost anything to gain an advantage. Will Beijing or Moscow “pause to indulge in theatrical debates?” No, they will proceed.

Karp is, to be fair, talking about Silicon Valley and its doubts about working on software projects that may have offensive military applications. This, of course, includes machine learning systems.

But his argument should apply to the EU, as well. Yes, the continent hasn’t seen a global conflict for almost 80 years now but who knows what the future holds? Russia is waging war on Ukraine already.

And if an even larger war comes, do Europeans really want to see that the opposing side is superior just because, a few years back, Brussels wanted to develop “ethical” and “environmentally friendly” AI systems?

Frodo Baggins saved Middle Earth. But he still needed lots of help from Elves and Dwarves who knew the world was bigger than the Shire. Someone in Brussels should read The Lord of the Rings.

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