European Union

The EU’s AI ACT will stifle innovation and won’t become a global standard

February 5, 2024 – On February 2, the European Union’s ambassadors green lit the Artificial Intelligence Act (AI Act). Next week, the Internal Market and Civil Liberties committees will decide its fate, while the European Parliament is expected to cast their vote in plenary session either in March or April. 

The European Commission addressed a plethora of criticism on the AI Act’s potential to stifle innovation in the EU by presenting an AI Innovation package for startups and SMEs. It includes EU’s investment in supercomputers, statements on Horizon Europe and Digital Europe programs investing up to €4 billion until 2027, establishment of a new coordination body – AI Office – within the European Commission.

Egle Markeviciute, Head of Digital and Innovation Policies at the Consumer Choice Center, responds:

“Innovation requires not only good science, business and science cooperation, talent, regulatory predictability, access to finance, but one of the most motivating and special elements – room and tolerance for experimentation and risk. The AI Act is likely to stifle the private sector’s ability to innovate by moving their focus to extensive compliance lists and allowing only ‘controlled innovation’ via regulatory sandboxes which allow experimentation in a vacuum for up to 6 months,” said Markeviciute. 

“Controlled innovation produces controlled results – or lack thereof. It seems that instead of leaving regulatory space for innovation, the EU once again focuses on compensating this loss in monetary form. There will never be enough money to compensate for freedom to act and freedom to innovate,” she added.

“The European Union’s AI Act will be considered a success only if it becomes a global standard. So far, it does not seem the world is planning on following in the EU’s footsteps.”

Yaël Ossowski, deputy director of the Consumer Choice Center, adds additional context:

“Despite optimistic belief in the ‘Brussels effect’, the AI Act has not yet resonated with the world. South Korea will focus on the G7 Hiroshima process instead of the AI Act. Singapore, the Philippines, and the United Kingdom have openly expressed concern that imperative AI regulations at this stage can stifle innovation. US President Biden issued an AI Executive Order on the use of AI back in October of 2023, yet the US approach seems to be less restrictive and relies upon federal agency rules,” said Ossowski.

“Even China – a champion of state involvement in both individual and business practices is yet to finalize its AI Law in 2024 and is unlikely to be strict with AI companies compliance due to their ambition in terms of global AI race. In this context, we have to acknowledge that the EU has to adhere to already existing frameworks for AI regulation, not the other way around,” concluded Ossowski.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva, Lima, Brasilia, and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.

EU’s whopping $1.3 billion fine shows it’s becoming a lonely island of restrictive regulation and rule

DUBLIN, IRELAND – On Monday, it was revealed that a 1.3 billion euro (1.3 billion USD) fine will be levied against the American tech firm Meta for GDPR violations stemming from the lapsing of the EU-US Privacy Shield in 2020.

The Irish Data Protection Commission is responsible for levying the fine, even though it disagrees with it, but must follow the binding decision of the European Data Protection Board, which evaluates violations of the General Data Protection Regulation (GDPR).

Though negotiations between the United States and the European Union on a privacy framework are still ongoing, the EU decided to impose this record fine regardless.

Yaël Ossowski, deputy director of the global consumer advocacy group Consumer Choice Center, responds:

“This retaliatory fine imposed by the EU — in the midst of privacy shield negotiations with the US — reveals the bloc is more interested in shaking down tech firms who deliver value to their users all the while providing no clear direction for global companies that already have millions of European users. 

“A good faith effort to work with US officials on a privacy deal, who are constrained by their own institutions and laws, would have yielded a much better result for consumers on either side of the Atlantic,” added Ossowski.  

“Instead, the EU is using ex-post-facto policing power that will likely diminish the online tech experience for European users and initiate a chilling in tech innovation on the continent.

“Once again, it seems the EU is responding to the changing face of innovation with bureaucratic committees and fines, rather than responsible and clear rules that anyone can follow.

“Rather than making Europe ‘fit for a digital age,’ these record fines and inability to work with global innovators demonstrates that the European Union is becoming an lone island of restrictive regulation and rule — and that’s at the expense of consumers,” concluded Ossowski.


The Consumer Choice Center is an independent, non-partisan consumer advocacy group championing the benefits of freedom of choice, innovation, and abundance in everyday life.

We champion smart policies that are fit for growth, promote lifestyle choice, and embrace tech innovation for tens of thousands of our members and society-at-large, using research and educational outreach to policymakers and the broader public. Learn more at consumerchoicecenter.org.

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