While the American tech sector has driven astonishing economic growth, leading to booming salaries and standards of living, Europe has languished behind. European politicians seem more interested in regulation than innovation, quashing AI development and investment with the AI Act and, more recently, flirting with the idea of using the Digital Services Act to attack TikTok’s presence in Europe. A more constructive approach, balancing the pursuit of growth with geopolitical and other concerns, is within reach.
Besides protecting people and values, Europe can help businesses create new and exciting technologies in two main ways.
First, the continent needs smart rules which are stricter for high-risk areas, such as data privacy and disinformation, but looser for lower-risk areas, allowing innovation to flourish.
Secondly, the EU should focus on cutting taxes, liberalizing labor market regulations, and reducing national protectionism in the services market. These reforms would create a more dynamic business environment, enabling startups to build ethical, responsible technology. Europe must remain safe, innovative, and competitive on the global tech market. A forward-looking, positive, proactive approach to regulation is the first step to achieving that.
• Mandatory human oversight for basic AI tasks
• Training data disclosures
• Multiple certifications & regular audits
• Continuous monitoring & risk assessmentsCost of compliance? Millions.
This kills innovation before it starts.
Just imagine being a European AI startup: pic.twitter.com/IKsRiIRUZk
— Ole Lehmann (@itsolelehmann) January 21, 2025
Today, technology is everywhere. As a result, we are connected, we are able to work faster, and we are able to develop new ideas. However, it also comes with risks. Tech power can cause geopolitical tensions, fake news can damage democracies, and data can be misused. As it stands, the EU’s rules for the tech industry try to cover everything in a one-size-fits-all regulatory blanket, writing an overabundance of caution into the law, which doesn’t work well. Strict rules slow down innovation.
Europe needs to protect user data, but it also needs to encourage innovation in fast-growing industries like AI, fintech, and biotech. Right now, strict, one-size-fits-all rules can slow down progress, even in areas where the risks to people are low. A smarter solution is to use tools like regulatory sandboxes, where companies can test new ideas under regulator guidance. These sandboxes, already successful in fintech, allow for innovation while keeping important safeguards in place.
EU bureaucrats are of the opinion that they know best where in Europe AI should be developed.
Folks, AI as any other technology thrives where innovation and entrepreneurship is, not bureaucratic decisions.
With EU energy suicide, energy intensive AI won‘t work in Europe anyway. pic.twitter.com/x3xVXUxUsv
— Michael A. Arouet (@MichaelAArouet) January 14, 2025
In low-risk areas, like tools for improving business processes or supply chains, lighter rules could make a big difference. For example, a fintech startup could test a new payment system without meeting all the rules right away, or an AI tool for supply chains could follow simpler steps if it doesn’t use sensitive data. By matching rules to risk, Europe can stay safe while helping businesses grow and innovate.
Slashing taxation and regulation
Europe also needs to support its tech innovators. The EU should prioritize cutting taxes, liberalizing labor market regulations, and reducing national protectionism in the services market. These measures would foster a more dynamic business environment, enabling startups and tech companies to thrive while staying competitive globally. By addressing these barriers, European companies can grow and compete effectively with global giants like Google and Amazon.
Right now, many startups in Europe struggle because they don’t have enough support to turn their ideas into reality. These policy changes would address the challenges startups face. By cutting taxes, liberalizing labor market regulations, and reducing national protectionism in the services market, the EU can create a dynamic environment where startups thrive while adhering to European values, such as fairness and transparency. This approach would position Europe as the global leader in cutting-edge yet safe technology at the forefront of innovation.
🇪🇺🇬🇧“The EU simply continues on the same, misguided path towards overregulating the digital sphere,” @pietercleppe warns. “The only thing left for the UK and others to do is not to follow it.”
— Prosperity Institute (@Prosperity_Inst) June 10, 2024
A proportional approach will keep these measures from becoming too restrictive or costly. By focusing only on high-risk areas, the EU avoids over-regulating the tech industry. Falling behind in the global tech race would cost even more in the long run.
To make this happen, EU leaders should work with businesses, researchers, and users to create clear and fair rules. They should focus on making the regulatory environment more conducive to growth by liberalizing labor market regulations. Transparency and regular reviews will help ensure these reforms are effective and keep the tech industry on track.
The EU has a big opportunity to lead the way in technology. By focusing on smarter rules and investing in startups, it can protect its people, encourage innovation, and stay competitive globally. Technology should serve society, not the other way around, and with this plan, Europe can show how it’s done.
This is a moment to act. Let’s build a safer, fairer, and more innovative digital future for everyone in Europe.
Lika Kobeshavidze is a Georgian analytical journalist and a writing fellow with Young Voices Europe, specialising in EU policy and regional security in Europe. She is currently based in Lund, Sweden, pursuing advanced studies in European Studies.
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