Europe Just A Tech Footnote? AI FOMO Is Alive and Well in Both France and Germany | Opinion

Europe Just A Tech Footnote? AI FOMO Is Alive and Well in Both France and Germany

AI regulation is necessary but not sufficient to stop Europe from being a tech footnote.

By:BLOOMBERG
| Updated on: Dec 12 2023, 07:25 IST
AI
Europeans are worried about the decline in a time of war and economic slowdown. (Pixabay)
AI
Europeans are worried about the decline in a time of war and economic slowdown. (Pixabay)

AI regulation is necessary but not sufficient to stop Europe from being a tech footnote.

For Europeans worried about decline in a time of war and economic slowdown, last week's OECD international education rankings didn't help. French 15-year-olds have seen a historic drop in math skills, and Germany's recorded their lowest scores ever. 

Amid the bad-tempered reactions over what to do about it, Paris was quick to point to the hope of one technology in particular: artificial intelligence. Emmanuel Macron's administration will next year roll out an adaptive testing AI tool in math and French for 200,000 high-school students. Developed by French startup EvidenceB, the program is designed to adapt to each individual student and help educators track their progress — and it's been pitched as a “sovereign” tool to restore the grandeur of France.

It's easy to be cynical about this kind of announcement. Governments leaping on technological flavors of the month to overhaul public services at a time of stretched budgets is nothing new. Maybe if the PISA scores had come out a few years ago there might have been a call for a math metaverse or a blockchain coding camp to improve kids' ability. It's not clear yet whether this rollout of AI testing will deliver productivity gains or digital headaches.

Yet it's testament to the real geopolitical panic gripping Europe when it comes to AI. France and Germany are fed up with losing yet another potential tech-industrial revolution to the US and Asia, which dominate the ranks of the most valuable tech companies. They also see a chance to reshape the state at a time when huge spending challenges from defense to climate change are mounting. These are valid concerns, even if the result is a kind of AI FOMO: Last month, German heavyweight SAP SE was among those investing over $500 million in Aleph Alpha GmbH, a startup rivaling the likes of OpenAI. And French startup Mistral AI this weekend was valued at around $2 billion in its own funding round.

Of course, the AI race may yield very unintended consequences. So the speed at which Paris and Berlin are scrambling to join also shows the need to get regulation right. This is why the European Union sees an advantage in being first with its banner “ AI Act.” The draft proposal, which has just passed a key legislative step toward reality, imposes transparency requirements for large-language models and a code of conduct for those deemed “systemic.” High-risk AI tools dealing with sensitive data — including, presumably, the kind of adaptive tests designed to get high-schoolers back on track — will have to meet product-safety-style guidelines before coming to market.

But it's important to consider the limits of regulation. The AI Act mustn't end up a GDPR Redux — or law that issues large fines primarily to big US tech companies such as Meta Platforms Inc. without actually curbing their dominance. The proposed financial penalties for AI Act infringements are fines of up to €35 million or 7% of global turnover. Will this be enough to dent the wallet of the likes of Microsoft Corp., which can pour $10 billion into OpenAI while its European rivals fight to raise hundreds of millions? With plenty of technicalities left to work out, from enforcement to copyright protections, French Digital Minister Jean-Noel Barrot sounded unenthused by the AI Act over the weekend: “The devil is in the details.”

If Europe is serious about being more than just a tech footnote while simultaneously trying to protect political and democratic values, its next focus should be on doing what the AI Act can't: creating a unified European market that has funding, skills and data that go beyond national borders. The CEPS think tank suggests connecting and funding AI hubs across the continent, investing in skills to avoid dealing uneven blows to the European labor market, and creating a real market for data that can be shared safely among companies. One positive recent step was the announcement to open up access to EU supercomputers for small businesses.

This will take time and effort, and won't on its own do away with the tension between innovation and regulation. In the UK, for example, competition regulators are taking a closer look at Microsoft just as the company pledges to invest billions in the country's AI infrastructure. These are early days. But something about the EU's current tech equation doesn't add up — and you don't need an AI to see it.

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First Published Date: 12 Dec, 07:25 IST
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