European AI – Prevarication and Delay

Europe is still fiddling

• The EU has postponed the implementation of a large part of the AI Act in a sign that the EU has realised that it went too far, but until there is visibility on what the eventual outcome is, the region will continue to languish.
• The EU is far behind the US and China when it comes to both roll-out and relevance in AI, and unfortunately, the EU’s well-intentioned AI Act has had precisely the opposite effect of that intended.
• The result has been that despite a big push from Nvidia, Mistral and most of the political class at the VivaTech Trade show in June 2025, the talk has not been converted into any visible action.
• A great example of the malaise is that in June, I spoke to a number of EU policymakers and government officials from EU member countries who all admitted that the AI Act had gone too far and risked harming the rollout of AI in Europe.
• The delay that the EU has announced could have been put into effect one day after VivaTech, but instead it has taken nearly 6 months to make even this tiny adjustment, which in the long term fixes nothing.
• All that has happened is that the EU has delayed the full application of most of the rules, including the rules for “high risk” AI systems, which basically includes all of the LLMs.
• These are the rules that have really hampered the rollout of AI in Europe, as they place obligations upon the creators of the algorithms that they have no hope of ever being able to meet.
• These rules were supposed to come into effect in August of 2026 and will now be delayed until December 2027.
• I presume the purpose of the delay is to give the EU more time to examine the rules and make changes to any rules that it thinks might be exacerbating the woeful state of AI in Europe.
• According to Dealroom.co, the 27-member EU states account for just 6% of total venture investment made in AI in 2025, and according to Epoch.ai, only 5% of total AI compute capacity that has been rolled out to date is located inside the 27-member states.
• By contrast, the USA accounts for 81% of all venture investment and 69% of the AI compute that has been rolled out to date, in a clear sign of just how far behind Europe has fallen.
• In the time that it has taken the EU to decide to postpone a rule rather than change it, the AI industry has announced trillions of dollars of investment in AI compute, the Chinese have taken over open source, and a slew of new models and business deals have been announced.
• The problem for Europe is that postponing the implementation does nothing for anyone who is thinking of making an AI investment in Europe, as the regulatory uncertainty has not changed.
• This is why I think Europe needs to move very quickly to clarify the regulatory environment that will be in force so that businesses and entrepreneurs can decide whether they want to build an AI business in Europe or not.
• The more it fiddles and prevaricates, the more start-ups, businesses and entrepreneurs will decide to set up elsewhere, and many other places are more than ready to welcome them.
• The net result is that the big talk at VivaTech has translated into very little, and the more that Europe prevaricates, the more it is going to get left behind.
• The most immediate beneficiary will be the Middle East, which sits on Europe’s doorstep and has plenty of space, money and energy to build the infrastructure for small private companies to use.
• I suspect that we will also see an influx of talent into the USA, which has taken the opposite approach to AI and is already by far the global leader for AI outside of China.
• The time for the EU to rethink the rules is running out, and the signs are that it won’t do anything until it is much too late.