AI Regulatory Outlook: European Tech Leaders Sound Alarm

0:00There have recently been a number of very prominent venture capitalists and business leaders out of Europe who have signed an open letter and essentially they're warning that overregulation of AI in EU laws and business leaders of Europe and business leaders of Europe and business.

0:30They've essentially created some proposals and some bills that they have sort of approved, but then they have to go and get essentially voted on and talked about by a number of different countries. And so I think it's going to be really interesting to see if that passes. Now, as that is kind of on the radar of a lot of different business professionals, there's a lot of different CEOs and VCs across Europe that have signed an open letter warning that this is actually going to be a little bit detrimental to their entire AI industry and their tech industry in general so they had executives from over 150 businesses including germany's siemens and france's airbus and they essentially just highlighted the risk of regulation saying that these rules could essentially threaten the ability of companies in europe um to compete in ai and also the essentially they're saying the legislation that's currently getting looked at and um people are trying to pass is failing to deal with other potential challenges that AI faces.

1:29So in this letter, they essentially are trying to offer the chance to rejoin the technological avant-garde. And they're just worried that, yeah, they're essentially going to get stifled. So among a lot of other different European industry leaders, the letter also has a number of people that have signed it that are fairly prominent, including Blablacar, which if you've been to Europe is a very massive company. Critero, Felix Capital, OneRagTimeVC, YNsect, Eli Partners, Minstrel, AI, GetYourGuide, Ventec, WeFox, AtomicVC, and LaFigmila VC. So there's, you know, 150 of these companies, but there's a lot of really prominent people.

2:16I mean, you have people from Airbus on here, and they're just, yeah, essentially, they're just worried about this. So in the letter, this is what it says. It says, in our assessment, the draft legislation would jeopardize Europe's competitiveness and technological sovereignty without effectively tackling the challenges we are and will be facing. So the EU, you know, all of this comes on the back of the EU, which has spent almost 10 years essentially working on draft proposals of what is now the Artificial Intelligence Act. And they've been working on what will serve as essentially the basis for negotiations between a number of different member states and the European Commission.

2:56But this could also make the jurisdiction like a.k.a. Europe one of the hardest places in the world for AI companies and platforms to actually operate. And so I think the demands or people asking for regulation has definitely increased a lot in the last, you know, number of months since ChatGPT launched. And this has fueled fears among some European governments. So, you know, we see cases like Italy, which just outright banned ChatGPT recently. I think they have brought it back. But, you know, one of the things that they cited was just, you know, privacy and other issues. I think they were worried that Italian users' data was used to train chat GBT, and they didn't want that to be the case.

3:40They wanted that data to be removed from the model. They had a bunch of different demands and stuff. So I think this is going to be really interesting because you have an area like the EU with so many different member states, and all of them are trying to – they all are taking different approaches, right? So it's going to be interesting in the negotiations to see who is in favor of what. But at the end of the day, it's going to be AI companies and technological companies in general that are hurt the most by over-regulating something that is very new. So included in the signatures, we also have the carmaker Renault and Heineken.

4:14And they're arguing that the proposed laws might heavily regulate foundational AI models regardless of their use case, which obviously is not the intended goal. so the the argue the letter essentially is arguing that compliance is going to cost and the liability risks could be disproportionate which is going to force companies and investors to leave the eu in order to take advantage of all of this new ai tech that's coming out and it's going to create a critical productivity gap with the u.s right eu does not want to get stuck in second place behind the united states when it comes to innovation and technology as is right a lot of big companies are moving to America, moving to Silicon Valley to pursue, you know, they see a lot of tech talent and kind of a hub where they're trying to, you know, grab talent to build these great companies.

5:02And so that's one thing that everywhere in the world is fighting. But on top of that, if everywhere in the world is just outright banning different AI use cases, all of the companies in not very regulated places are going to have major advantages. And, you know, the EU, of course, would like to avoid that. So they argue that the regulators need to create laws that are you know limited to well essentially they're saying that these laws are limited to rigid compliance rather than to broad principles on a risk-based approach meaning that europe is going to be forced to essentially quote unquote stay on the sidelines in this whole new era of ai and you know we're seeing um we're seeing this ai come out of every single country and so they definitely do not want to get left behind in this entire um race to you know create these powerful AIs.

5:50So the companies, essentially, they're calling for the formation of an EU regulatory body, which has industry experts in it, right? They would like people that are actually into the industry and know what's going on, that can monitor how laws are applied and also can, you know, give their own perspectives on technological things. Now, some people would say this is a conflict of interest. You know, we have the same issue here in the United States where essentially with, you know, drug administrations like the FDA. People want industry experts to be in the FDA, but then people are worried about conflict of interest that we have to kind of sort through with, you know, some, a company like Pfizer or Johnson and Johnson is developing vaccines.

6:30And, you know, they're in there with, in the meetings with the FDA on approving vaccines or their efficacy or a whole number of different problems. It gets, it's very tricky to have industry experts, aka people high up in companies getting regulated in at the same table with the regulators. It's difficult, right? And to make sure there's no conflicts of interest and the relationships there aren't, you know, compromised. And so I think that's something that we're going to have to grapple with one way or another. But at the same time, you don't want the opposite of that where regulators are just making all of these rules and they don't actually understand the underlying technology because they've never been in the actual industry.

7:06So neither of those situations are ones that I think a lot of people want. And so it's going to be really interesting to see how we kind of strike a balance in that regard. So I will say that this letter in particular has been criticized by Dragos Tudorch, who is an MEP involved in drafting the laws, who said that, you know, obviously these larger companies, he's just saying that larger companies are being lobbied by an aggressive few um he actually made a statement to tech crunch um and a spokesperson for the letter who is janet zu first springberg of la famiglia said in all its complexity the upcoming ai revolution will significantly shape the future of every continent we have long been discussing the lack of technological leadership in europe and now it is the time to take action We have come to the conclusion that the AI Act in its current form has catastrophic consequences for European competitiveness.

8:03Sorry, that was a spokesperson for this actual letter that has been drafted by the business professionals. So they said, we are currently witnessing a lot of European talent give up leading positions at U.S. tech companies to develop European technology. The spirit of innovation is in jeopardy. So I think, you know, we have seen a lot of people that are interested in working for U.S. companies and a lot of people that are coming from U.S. companies back to Europe because, you know, or wherever they're from because they want to build technology that helps their ecosystem of where they're where they're from.

8:36So I totally understand that. And it does make it difficult. Right. So if one of these people, let's say they leave Google's DeepMind AI project to go start a company in Europe, they want to go and help their local area, and then all of a sudden Europe starts regulating what they're actually able to develop and create, that's going to really put pressure on them to just leave and go back to somewhere less regulated, which is the opposite of what Europe and any other country is trying to do at this time. So I think it's really important to obviously look at what regulation looks like in AI, but I just think it's really important not to get to jump the gun and overregulate such an industry that has such massive disruption potential before we really understand it fully and really understand what it is capable of doing.

9:23especially you know they're kind of accusing this um of of being an industry or an area where people are looking at regulating it from a very practical perspective instead of an ideological perspective and so there's definitely a difference and we're gonna have to continue to look and follow up on how that continues to play into the future