EU regulation of Artificial intelligence in the shadow of global interdependence


American research institutes are world leaders in AI. And US firms currently dominate the European AI landscape; Microsoft, Alphabet, Meta, and Amazon Web Services immediately come to mind. Does this heavy American presence create a challenge for EU AI policy? If so, how, and how should EU policy deal with it? In essence, project II asks: how central should the transatlantic axis be to EU AI policy?

Many European policymakers fear for the economic competitiveness of the European AI sector specifically, and that of other companies dependent on AI more generally. Big tech is widely seen as topping the economic food chain, a claim underpinned by towering stock market valuations of the leading firms. AI, in turn, is central to leading firms' corporate strategies. In this view, Europe risks becoming a second-rate economic power unless it grows a globally competitive tech sector of its own.

For some, these competitiveness concerns argue against EU regulatory stringency that would further hamper its already lagging AI sector. It is unclear, however, just how relevant these competitiveness concerns are with an eye to long-term prosperity. How much of it really hangs on global leadership in AI technologies? There is, after all, a big difference between hosting leading AI companies themselves, and sustaining access to these technologies as they are used to upgrade and boost productivity in non-AI sectors. Much more threatening, it seems, would be potential export restrictions elsewhere that would cut Europe off from access to cutting edge technology.

Irrespective of competitiveness concerns, when AI-powered services are supplied from across the Atlantic, it may be more difficult to regulate them effectively, in particular concerning monitoring and enforcement of compliance. Here, shared transatlantic standards would clearly help. At the same time, it is an open question to what degree the EU should be ready to dilute its own regulatory ambitions in order to reach agreement with Washington. After all, the impact of divergent rules on regulatory effectiveness will be highly varied across AI use cases.

In the meantime, geopolitics cast an ever longer shadow over transatlantic regulatory interdependence in AI. Many in Washington less AI primarily through the lens of US-Chinese competition, with Europe barely worth consideration. Where it does enter the equation is as a potential ally in an anti-China AI coalition - both in geostrategic terms but also in the development of multilateral AI standards that would enshrine "democratic values". Here, too, much hinges of the force of that argument. Since September 2021, Brussels and Washington have discussed AI regulation through the transatlantic Trade and Technology Council. To how much regulatory alignment that will ultimately lead is unclear, however, depending both on the ultimate shape of the AI Act in Europe and eventual legislation in the US - especially since the US Supreme Court has limited the rule making power of federal agencies in the absence of explicit authorization by the US Congress.

Looking forward, could and should the EU champion selective cooperation, or a deeply integrated transatlantic regulatory space, with few internal barriers for AI technology? And for which dimensions of regulation would and should the EU be willing to accept compliance with US rules as equivalent to abidance by its own, and where would and should it insist to verify such compliance itself?

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