{"id":11924,"date":"2026-03-26T17:34:29","date_gmt":"2026-03-26T15:34:29","guid":{"rendered":"https:\/\/escp.eu\/thechoice\/?p=11924"},"modified":"2026-03-26T17:34:32","modified_gmt":"2026-03-26T15:34:32","slug":"can-europe-regulate-ai-without-falling-behind","status":"publish","type":"post","link":"https:\/\/escp.eu\/thechoice\/tomorrow-choices\/can-europe-regulate-ai-without-falling-behind\/","title":{"rendered":"Can Europe regulate AI without falling behind?\u00a0"},"content":{"rendered":"\n<p>The European Union set out to make itself the global home of \u201ctrustworthy AI\u201d, building the world\u2019s first comprehensive rulebook for the technology.<\/p>\n\n\n\n<p>But parts of the landmark AI Act, passed in 2023 have been delayed, and businesses are warning about the cost of compliance. The policy has exposed a familiar European dilemma: how to regulate powerful new technologies without slowing down innovation.<\/p>\n\n\n\n<p><a href=\"https:\/\/escp.eu\/meissner-philip\" target=\"_blank\" rel=\"noreferrer noopener\">Philip Meissner<\/a>, Chair of Strategic Management and Decision Making at ESCP Business School and founder of the <a href=\"https:\/\/digital-competitiveness.eu\/\" target=\"_blank\" rel=\"noreferrer noopener\">European Center for Digital Competitiveness<\/a>, <strong>argues the regulation may already be holding companies back in Europe<\/strong>.\u00a0<\/p>\n\n\n\n<p>\u201cIt has not made Europe stronger in AI,\u201d says Meissner. \u201cWhen you look at the frontrunners in the technology, it is still the US and China.\u201d<\/p>\n\n\n\n<div class=\"wp-block-columns are-vertically-aligned-center is-layout-flex wp-container-core-columns-is-layout-9d6595d7 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-vertically-aligned-center is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:66.66%\">\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>[Regulation] has not made Europe stronger in AI. When you look at the frontrunners in the technology, it is still the US and China.<\/p>\n<\/blockquote>\n<\/div>\n\n\n\n<div class=\"wp-block-column is-vertically-aligned-center is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:33.33%\"><div class=\"wp-block-image is-style-rounded\">\n<figure class=\"aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/escp.eu\/thechoice\/wp-content\/uploads\/2-edited-1024x1024.jpg\" alt=\"Photo of Philip Meissner\" class=\"wp-image-11204\" srcset=\"https:\/\/escp.eu\/thechoice\/wp-content\/uploads\/2-edited-1024x1024.jpg 1024w, https:\/\/escp.eu\/thechoice\/wp-content\/uploads\/2-edited-300x300.jpg 300w, https:\/\/escp.eu\/thechoice\/wp-content\/uploads\/2-edited-150x150.jpg 150w, https:\/\/escp.eu\/thechoice\/wp-content\/uploads\/2-edited-768x768.jpg 768w, https:\/\/escp.eu\/thechoice\/wp-content\/uploads\/2-edited-96x96.jpg 96w, https:\/\/escp.eu\/thechoice\/wp-content\/uploads\/2-edited.jpg 1035w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">\u00a9Tobias Koch<\/figcaption><\/figure><\/div><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Regulation vs innovation<\/strong><\/h2>\n\n\n\n<p>The divide has also taken on a political edge. U.S. President Donald Trump has criticised the EU\u2019s approach, warning that action against American tech companies could amount to \u201ca form of taxation\u201d.<\/p>\n\n\n\n<p><strong>Under the AI Act, companies developing \u201chigh-risk\u201d AI systems must explain how their models are built and used<\/strong>. The most powerful systems must also undergo risk assessments, and companies that fail to comply could face heavy fines or even be barred from operating in the EU.<\/p>\n\n\n\n<p>The EU says the aim is to position Europe as a global leader in responsible AI. But large tech companies, including Meta, have warned that strict rules could discourage investment and stifle innovation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Adoption gap<\/strong><\/h2>\n\n\n\n<p><strong>Europe has some momentum in artificial intelligence<\/strong>, Meissner says \u2013 with companies such as French start-up Mistral AI raising billions of euros to build large language models and compete with bigger US rivals \u2013 but that progress is happening \u201cdespite the regulation and not because of it\u201d, he says.&nbsp;<\/p>\n\n\n\n<p>For Meissner, the issue is less about companies building cutting-edge models than about how widely businesses use the technology. Adoption is low; <a href=\"https:\/\/ec.europa.eu\/eurostat\/web\/products-eurostat-news\/w\/ddn-20251211-2\" target=\"_blank\" rel=\"noreferrer noopener\">only about one in five EU businesses uses AI, according to Eurostat<\/a>.<\/p>\n\n\n\n<p>Part of the hesitation comes from uncertainty over what the rules allow, Meissner says. The AI Act classifies systems by risk and imposes strict requirements on certain uses. But the complexity of the framework has left many companies unsure about what they can safely deploy, according to Meissner.&nbsp;<\/p>\n\n\n\n<p>\u201cThere is still a large scepticism about what can be done with AI and what is allowed,\u201d he says.&nbsp;<\/p>\n\n\n\n<p>In many European companies, he adds, the discussion of AI begins not with engineers but with lawyers. He says: \u201cIn other regions of the world, it is often the other way around.\u201d<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The SME challenge<\/strong><\/h2>\n\n\n\n<p><strong>The debate reflects a broader pattern in Europe, where technology policy is often framed around rules and compliance<\/strong>. <a href=\"https:\/\/commission.europa.eu\/law\/law-topic\/data-protection\/legal-framework-eu-data-protection_en\" target=\"_blank\" rel=\"noreferrer noopener\">The EU\u2019s General Data Protection Regulation, introduced in 2018, gave people more control over how companies collect and use their personal data<\/a>. But businesses \u2013 particularly smaller companies \u2013 have long complained about the cost and complexity of complying with the rules.\u00a0<\/p>\n\n\n\n<p>\u201cIf you are a huge company, you can hire a team of 10 lawyers to deal with regulatory compliance,\u201d Meissner says. \u201cIt is expensive and painful, but you can do it. If you are a smaller company it gets harder and harder.\u201d<\/p>\n\n\n\n<p>This matters because small and medium-sized enterprises form the backbone of Europe\u2019s economy, <a href=\"https:\/\/single-market-economy.ec.europa.eu\/smes_en\" target=\"_blank\" rel=\"noreferrer noopener\">making up around 99% of all EU businesses and providing roughly two-thirds of private sector jobs<\/a>.<\/p>\n\n\n\n<p>The European Commission is reportedly considering delaying parts of the AI Act as pressure from companies grows. Draft proposals suggest Brussels may give businesses more time to comply with some rules and postpone fines for violations.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>For me, we need to stop this reflex of regulating everything first. Brussels should relax and take a more business-friendly approach.<\/p>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Global competition intensifies<\/strong><\/h2>\n\n\n\n<p>More broadly, Meissner argues Europe needs a more business-friendly environment \u2013 if it wants to remain competitive with the US and China in AI.<\/p>\n\n\n\n<p>The largest AI companies and models \u2013 including those developed by OpenAI, Google, Anthropic and Meta \u2013 are based in the US, while China has made AI a national strategic priority. <strong>Europe has strong research institutions and a growing AI start-up ecosystem<\/strong>, but far fewer global technology leaders in AI.<\/p>\n\n\n\n<p>\u201cFor me, we need to stop this reflex of regulating everything first,\u201d Meissner says. \u201cBrussels should relax and take a more business-friendly approach.\u201d<\/p>\n\n\n\n<p>That could include simplifying regulations and making it easier for companies to develop and deploy new technologies. \u201cWe cannot have more regulation than everybody else and expect to have more progress in AI,\u201d he says.<\/p>\n\n\n\n<p>Beyond regulation, infrastructure is also becoming a challenge for Europe\u2019s AI sector. Training and running advanced AI systems requires huge computing power, which means building large data centres and using vast amounts of electricity.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Energy and infrastructure<\/strong><\/h2>\n\n\n\n<p>That raises questions for Europe, where energy prices remain much higher than in the US. <a href=\"https:\/\/www.ft.com\/content\/d48f6a08-0b7d-4a01-a84f-b0fbecf03915\" target=\"_blank\" rel=\"noreferrer noopener\">The issue has become more pressing as gas prices have surged following the recent conflict in the Middle East, raising fears of another energy crunch in Europe<\/a>.\u00a0<\/p>\n\n\n\n<p>\u201cWhen you look at what is driving the cost of AI, it is largely energy,\u201d Meissner says. \u201cIf you have twice the energy prices of the US, it becomes very difficult to make the business case.\u201d<\/p>\n\n\n\n<p><strong>That does not mean Europe cannot compete.<\/strong> The region still has strong research institutions, established companies and growing interest in AI. But success will depend on whether the region can create the right conditions for companies to develop and scale the technology.<\/p>\n\n\n\n<p>\u201cThe broader question,\u201d Meissner says, \u201cis whether we really have the right business environment in Europe.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The EU\u2019s AI Act aimed to make Europe the global home of safe and responsible AI. But delays, business pushback and competition from the US and China raise a key question: can strict rules coexist with fast-moving innovation?<\/p>\n","protected":false},"author":1,"featured_media":11926,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[14],"tags":[126,62,16],"class_list":["post-11924","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tomorrow-choices","tag-artificial-intelligence","tag-innovation","tag-strategy","category-14","description-off"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Can Europe regulate AI without falling behind?\u00a0 - The Choice by ESCP<\/title>\n<meta name=\"description\" content=\"The EU\u2019s AI Act aimed to make Europe the global home of safe and responsible AI. 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