Europe Prioritizes Industrial Policy Over Public Interest in Tech

Key Quotes

"a lot of eu regulation is being revisited with regards to well whether it serves those purposes of fostering growth and or national security and that is actually quite a shift from a couple of years ago when politicians at least still talked about things like public interest or human centric design or fairness right now it's all about industrial policy so the idea that government should decide which sectors should grow and as we also already touched on last time there is a lot of support for expanding the military sector and technology is seen as an important area within that and this is also quite a win for big tech i would say because deregulation and growth is something that also benefits them a lot"

Aline Blankertz explains that the focus of European Union regulation has shifted from public interest and human-centric design to industrial policy, prioritizing growth and national security. This change, Blankertz argues, benefits big tech companies by promoting deregulation and economic expansion, which aligns with their business interests.

"the draghi report really pushed that into momentum where now everybody says we need to deregulate so while that regulation was never perfect to begin with and that romantic perspective of like it never ensured that companies actually worked in the public interest but now even those guardrails are being attacked very heavily and mostly really from industry actors both outside of europe but also european companies it's kind of everybody's trying to tip in with ideas of which provisions could be deleted"

Blankertz notes that the Draghi Report accelerated a deregulatory trend in the EU, even though existing regulations like GDPR were not perfect. She highlights that industry actors, both foreign and domestic, are actively seeking to weaken or remove these regulatory guardrails, moving away from any semblance of public interest focus.

"france and germany announced a partnership by french mistral and german sap to use ai in the public administration and that's bad for a variety of reasons like i would say it's the completely wrong approach to digitizing public services because it undermines accountability but irrespective of that like we know that this ai paradigm has been shaped by big tech i mean our common friend cecilia recup she has great papers showing that google amazon and microsoft have all been very carefully planning the ai development trajectory to be compatible with their research agenda by capturing both academic research and startups"

Blankertz criticizes the partnership between France and Germany to use AI in public administration, stating it's the wrong approach for digitizing public services as it undermines accountability. She points out that this AI paradigm is shaped by big tech, citing research that shows how companies like Google, Amazon, and Microsoft have influenced AI development to align with their own research agendas by co-opting academic and startup efforts.

"so if we just kind of look at the role of europe in the current ai bubble i think it's important to emphasize that well a lot of people observers like goldman sachs jp morgan the economist have for over a year been flagging the concerns about an ai bubble but this is not mentioned at all for example at this summit but everybody sees generative ai still as the only way forward and what's important then to consider is that well the us government has pushed this a lot with its for example its stargate initiative where it actually encouraged a lot of private money to go into this but at some point that will dry up and what those companies are doing right now is they are looking for new sources of income and that's where european governments come in very handy"

Blankertz observes that while financial institutions have warned of an AI bubble, this concern is absent from discussions at a recent summit, where generative AI is still presented as the sole path forward. She explains that US government initiatives have fueled private investment in AI, and as this funding potentially dries up, big tech companies are now seeking new revenue streams, making European governments a convenient target for continued investment.

"i mean maybe before going into clouds specifically i'd kind of like to briefly take one step back and look at kind of where europe stands vis a vis the us because i think it's important to bear in mind that also europe is quite divided and there is a still i mean since we last spoke this far right turn has become much worse so in the last two weeks we we've seen the center right party the epp partnering up twice already with fascist parties to water down rules for sustainability and this is at the uh european union level right yes exactly there is a lot of well a lack of coherence about actually where europe if you know whatever that means wants to go and especially in within those far right parties it's a well i would say fairly dynamic situation because some of them used to be closer to russia for example now they are kind of making their peace with nato increasingly and overall there's still a lot of hesitation to push back the against the us too much because europe is just so exposed economically to the us so those tariffs hurt some of some countries quite badly and germany is very much at the front there because they just export so much"

Blankertz describes Europe as divided, noting a significant shift to the far-right, with parties partnering to weaken sustainability rules. She points out a lack of coherence regarding Europe's direction and highlights hesitation to push back against the US due to economic exposure, particularly for export-heavy countries like Germany, which are vulnerable to tariffs.

"the example of munich that you give is fascinating though right to to actually make the move and then start to roll it back because microsoft locates the office there and like part of you has to imagine that maybe that was part of the goal like you know they choose munich in order to try to reverse this key example of a government like getting off of its services to show like now everyone should stay on microsoft and not try something different you know i think they were really concerned about munich setting a precedent so there there is no question like actually the the ceo back then flew to munich specifically to negotiate with them a cheaper contract for microsoft services"

Blankertz discusses the Munich example, where the city initially switched from Microsoft to Linux but later reverted. She suggests that Microsoft's subsequent establishment of offices in Munich and the CEO's direct negotiation for a cheaper contract indicate a strategic effort to prevent Munich from setting a precedent for other governments to move away from their services.