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A
Indiana University strengthens tomorrow's workforce with practical, real world experience. IU grads make a difference in your community, serving as teachers, nurses and engineers who rise to tomorrow's challenges and meet them. Learn more at iu. Edu Impact, Bloomberg Audio Studios Podcasts Radio News so Professor Anu Bradford from Columbia Law school, it's been 14 years since you coined that term, the Brussels describe, the EU's global regulatory influence. If you could take us back to that point, what is it about the EU's global regulatory power that you were trying to encapsulate with that term?
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B
Stephen? It was a very different world that the EU was living in, and it was the moment when the EU was extremely ambitious about building the regulations that were advancing its values around sustainability, around digital rights, and also interested in making sure that those rights are respected by foreign companies. And that then gave the EU this tremendous global, unilateral regulatory power. But it was also the world in which other dimensions of power were relatively not that more important as they are today. We didn't need to worry as much about the European military power. And there was a particular aspect where the EU really felt that it had influence. It had the influence to shape what products were produced and consumed. And that gave the EU certain, I would say, a power that had been not fully appreciated in the conversations about global influence.
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A
Where are we then, 14 years on, has that power, that influence diminished?
- [01:49]
B
I think it's fair to say that we are no longer at the heyday of the Brussels effect or regulation. I don't think it has entirely disappeared by any means. But at the same time, I would say that the EU's regulatory agenda faces tremendous challenges, both external and internal. We could not have imagined at the time that we would be having a Trump administration where the US is very aggressively attacking Europe's regulatory sovereignty, basically forcing the EU to diminish some of those regulatory ambitions. And also then the internal pushback that is coming now from companies that is causing now the EU to some extent lose its own confidence in its regulatory agenda, when we are so worried about the EU's competitiveness, the EU's technological sovereignty. And there seems to be now a narrative that maybe this commitment to regulations like digital regulation is standing in the way of achieving those goals.
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A
Well, let's talk a bit about that criticism then. I mean, how much of it is fair or legitimate that perhaps the EU did go too far in regulation, you know, are efforts that the EU is making to simplify their regulations, as they put it, a step in the right direction?
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B
Well, I generally would say that any responsible regulator, especially when you are trying to regulate a fast moving space like technology, needs to engage in irregular self reflection and assess whether we have done it the right way. And especially if you look at the number of different regulations that have been passed in Brussels, yes, there are probably some redundancies, inconsistencies, overlaps, where some simplification is in order. So I'm not defending every provision of every rule coming out of Brussels. I think for instance, the GDPR has been somewhat too burdensome, especially for the small and medium sized companies, and maybe inadvertently entrenched the power of the big tech who can better afford to engage in very costly regulatory compliance. But I'm more worried, Stephen, that this conversation is now, I think, taking too much off the political space and energy in Brussels, because I think even though I'm fully 100% on board, that we need to prioritize Europe's competitiveness. We need to prioritize technological sovereignty. There's no security without prosperity. These are absolutely the right goals. But deregulation or just trying to tweak the AI act or the gdpr, they will do collectively very little to help the EU enhance that goal. So instead I think we should be focusing on what the real problems and the sources of the so called innovation gap between the EU and the US are, why the EU hasn't been as successful in building those tech companies. And I would argue the reason is not ambitious digital regulation. It's the EU's failure to build those fundamental pillars of the tech ecosystem where the US has been much more successful. So the digital single market, the capital markets union, rethinking cultural and legal barriers to risk taking, like punitive bankruptcy laws that deter the entrepreneurs from pursuing really cutting edge risk innovations. And I think very importantly that the EU has not been as successful as the United States in attracting local talent to innovate in Europe.
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A
So are we looking in the wrong place then to try and fix this problem? Is the EU being susceptible to the influence of the Trump administration in looking at the criticism at regulation rather than tackling those underlying issues? And can you do both? Can you innovate and grow while also having strong and robust rules?
- [05:45]
B
Absolutely. I think this has been portrayed as a false choice that the EU either can afford to protect the digital rights or then it will be successful in innovating. And I think absolutely those two both are possible. So in many ways, I think in two today's volatile world, the rules create some predictability, they create certainty. And I think it would be Very difficult to claim that if you look at what is happening in the AI space, that it would be optimal not to have rules. I think there are genuine societal concerns and we need AI governance. So in many ways, I think the Europeans are on the right side of history. Even if you look at the conversations in the United States today, there's a lot of resistance now to these massive infrastructure building, the data centers, the harms of that AI does to the mental health of the teenagers. So I think the EU should retain its confidence that it does need to protect fundamental rights, it needs to protect democracy, but at the same time, it should show equal ambition in then building those pillars of an innovation ecosystem. So I think that would be my recipe for going forward.
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A
Is there an issue with enforcement on some of these rules as well? You know, the Digital Markets act as this key piece of technology regulation the EU has, it's faced a lot of criticism from the Trump administration as well. But the fines being handed out under the DMA are relatively small amounts of money, 500 million euro, 300 million euro versus, for example, what the competition rulings used to hand out when we were seeing massive decisions against American companies. Is there an issue, do you think too, that the rules, imperfect as they may be, are not being enforced?
- [07:40]
B
So I think the concern around enforcement dates back to the era before the US Was pushing back on those regulations. It is one thing to have these ambitious laws in books. It is a much harder thing to enforce them against powerful tech companies that can afford very robust legal challenges, those rules. But obviously now there's an additional concern around enforcement when the Europeans are navigating the growing pressures from the Trump administration. I think the Europeans do not want to be seen as capitulating. It is not a popular politically position to take that the European politicians would say that we let the Trump administration to write the rules for Europe. But at the same time, I think there is certain pragmatism that might be characterizing how fines are being set, how enforcement priorities need to be at least communicated so that they do not provoke the kind of sentiment that the Europeans would be going after the American companies. But I think it is notable that the Trump administration has primarily attacked the dma, the Digital Markets act and the dsa, the Digital Services Act. Yet the core simplification agenda now focuses on the GDPR and the AI act, which seem to be more reflecting than the internal pressures. I would say the conversation that changed up the drug is report on competitiveness. And what would be then the key legislators, what would be then the key legislations to make sure that those impediments, or at least alleged impediments for European growth exist. But there is an argument that we are not necessarily seeing as high fines when the EU is navigating between committing to its own regulatory priorities, yet maybe trying to some extent navigate at least implicitly, some of the pressures from the Trump administration, but the enforcement is going forward.
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A
Do you feel that they are navigating that correctly at that point then, and striking that balance?
- [09:52]
B
No, I think it's really difficult to say. In many ways, I would say that the Europeans need to be very clear that they have little to gain by capitulating to the demands of the Trump administration, because those will continue. There is no way to buy stability. There is no way for the Europeans to say that if we refrain from bringing this and this case against this company, that somehow the demands would stop. If the Europeans seem to be giving in, then the next demand will follow the next day or the next week or the next month. So I think then you set the dynamic for Europe's regulatory agenda from which the Europeans cannot emerge as winners. So in that sense, I think there should be very little impetus to give in when it comes to pressures from the Trump administration.
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A
Can the EU in its current form compete globally with the US on one side, China on the other? This is something that you've written another book, Digital Empires about.
- [10:56]
B
So there are many challenges and the weaknesses that the Europeans have. If we think about the AI race, for instance, there are many who describe the race as being just between the US and China. Those are the sources for large language models. The Europeans don't have as much to show in terms of their own technological innovations. But I think there are many strengths the Europeans have. For instance, if we think about the artificial intelligence, what really matters is not just that we have the energy intensive, capital intensive, large language models. What matters is how you actually make this AI serve the company, serve the society, what the applications are, how AI will be adopted across the various verticals of the economy. And there's no inherent disadvantage that the Europeans have on that very important layer of, of the AI supply chain. There are also examples of European companies that are absolute key players here. The Dutch ASML in terms of the equipment in the manufacturing layer, of the supply chains, key to the semiconductors. So yes, there are European success stories, but yes, there are many challenges. There are technological dependencies and vulnerabilities. And I think it is is important that the Europeans are determined to try and mitigate them as soon and as well as they can.
- [12:23]
A
Are you optimistic about the future of the EU's regulatory power in this area? It's something that you've spent your career tracking?
- [12:32]
B
No. In many ways, I think the Europeans are on the right side of history. It is very difficult for me to envision the world that is best served by the position that the United States States has taken where we hand over the governance of technology to these tech companies. They don't serve public interest. Mark Zuckerberg doesn't wake up in the morning and ask the question what he can do for democracy today. I think Europeans do need to assert the democratic governance of our digital future. But at the same time, I recognize we can't be naive about some of the challenges. I think that geopolitical weaponization of these technologies has made it plain for the Europeans that the Europeans need to gradually de risk both from Chinese and American technologies. That means building alliances with other like minded middle partners. It also means enhancing Europe's own sovereign technological capabilities. But it will mean still for the years to come, some decree of collaborations with the Americans, to some extent with Chinese. There is no country in the world that can be entirely, completely, technologically sovereign that is not even available for the United States. The United States also needs allies, even Europe, more than it often admits. And China needs other partners as well. And I think that also means that we are not seeing a fully decoupled global economy. And I think it's just a terminus time for the Europeans and for the rest. But I'm never giving up on Europe. I think there are many great strengths that Europe has. And now I just hope, hope it will have the kind of confidence and conviction in defending its own values while being absolutely resolute and ambitious in mitigating the kind of deficiencies that exist in Europe's own technological supply chain.
- [14:26]
A
Okay, Anna Bradford, thank you very much.
- [14:28]
C
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