Why is the US following the EU example in regulating artificial intelligence?

In the intensifying race to compete globally in artificial intelligence (AI), the United States, China and the European Union are vying to be home to what may be the most important technological revolution of our lives. AI governance proposals are also evolving rapidly, with the EU proposing an aggressive regulatory approach to complement its already onerous regulatory regime.

However, it would be unwise for the US to adopt Europe’s more top-down regulatory model, which has already decimated innovation in digital technology in the past and will now do the same for AI. The key to competitive advantage in AI will be openness to entrepreneurship, investment and talent, and a flexible governance framework to address risk.

The International Economy Journal recently asked 11 experts from Europe and the USA where the EU currently stands in global technology competition. The reactions were almost unanimous and were bluntly summed up by the title of the symposium: “The biggest loser.” Respondents said Europe is “lagging behind in the global technology race” and “is unlikely to become a global center for innovation”. “The future will not be invented in Europe,” concluded another analyst.

This gloomy assessment reflects the EU’s risk-averse culture and preference for compliance with paperwork over entrepreneurial freedom. After the continent piled on data restrictions from the mid-1990s, innovation and investment suffered. Regulation became more complex with the General Data Protection Regulation (GDPR) of 2018, which further restricts data collection and use.

As a result of all the bureaucracy, the EU came out of the digital revolution with “the complete absence of superstar companies.” There are no serious European versions of Microsoft, Google, Facebook, Apple or Amazon. Europe’s leading providers of digital technology services are now US-based companies.

The regulatory burdens in Europe hit small and medium-sized companies hardest. Two recent studies have documented how the GDPR “associated with significant costs due to lost innovation‘ and led to ‘more concentrated market structures and consolidation of the market power of those who are already strong.”

The same situation is already unfolding in the AI ​​markets. Center for Data Innovation Analyst Benjamin Mueller notes that only five of the 100 most promising AI startups are based in Europe, while private funding for AI startups in Europe for 2020 ($4 billion) is dominated by the US ($36 billion) and China ($25 billion). dollars) was eclipsed.

Still, European officials are redoubling their onerous data control regime with a slew of new laws, including the Digital Markets Act and the Digital Services Act, which mostly should limp large US technology companies.

Next comes a new one Artificial Intelligence Law, which proposes banning some AI technologies while placing many others in a tightly controlled “high risk” category. A new European artificial intelligence body will enforce a bureaucratic system of “conformity assessments” and impose hefty fines for violators. An addendum to the AI ​​law provides a long list of covered sectors and technologies that the law aims to expand in the coming years. Analysts rated the measure “the mother of all AI laws‘ and pointed out that complying with the laws will impose daunting barriers to AI innovation in many sectors, deterring investors and talent in the process.

The EU’s approach will make it particularly difficult for startups to develop breakthrough AI services. The largest network of small and medium-sized enterprises (SMEs) in Europe’s information sector, the European DIGITAL SME Alliance, says the AI ​​Act’s mandates are “a burden on AI innovation” and “are likely to drive SMEs out of the market”.

The EU itself says that only the statutory establishment of quality management systems is required will cost around $193,000 to $330,000 upfront plus $71,400 in annual maintenance costs. Smaller operators will struggle to manage these burdens and other compliance requirements. “This is exactly the opposite of the intention to support a thriving and innovative AI ecosystem in Europe,” concludes the European Digital SME Alliance.

While it is true that the EUhas become the most powerful and aggressive tech regulator in the world‘ and now tries to get, in the words of a headline in The Economist: ‘the global super regulator in AI‘, it’s the same strategy they’ve been promoting for two decades without much to show for it. If the EU succeeds in eliminating all theoretical AI risks, it is only because it has eliminated most of its AI innovators through complex and costly compliance requirements. And when Europe’s top export is regulation rather than useful AI products, it’s hard to see how this will benefit the continent’s citizens in the long run.

Regardless, this should not be the model the US follows if it hopes to maintain its early lead in AI and robotics. America should instead welcome European companies, workers and investors looking for a more hospitable place to bring bold new AI innovations to market.

Adam Thierer is a Senior Research Fellow at the Mercatus Center at George Mason University.

Leave a Reply

Your email address will not be published.