Bloomberg Audio Studios, podcasts, radio news. So, Professor and a Bradfred from Columbia Law School, it's been fourteen years since you coined that term, the Brussels Effect to describe the e'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.
You know, 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 we're advancing, its value around sustainability, around digital rights, and also interested in making sure that those rights are respected by foreign companies, and that then gave the EO this tremendous global unilateral regulatory power. But it was also the world in which other dimensions of power we're 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.
Where are we then, fourteen years on, has that power that influence diminished?
I think it's fair to say that we are no longer 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 at haacking Europe's regulatory sovereignty, basically forcing the EO
to diminish some of those regulatory ambitions. And also then the internal pushback that is coming now from companies that is causing now the EO to some extent lose its own confidence in its regulatory agenda. When we are so worried about the EU's competitiveness, the use technological sovereignty, and there seems to be now a narrative that may be this commitment to regulations like digital regulation is standing in the way of achieving those goals.
Well, let's talk about 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 our efforts that the EU is making to simplify the regulations, as they put us a step in the right direction.
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 regular 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 redundancy 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 to burdens some especially for the small and medium sized companies, and maybe inadvertently entrance 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 of the political space and energy in Brussels, because i think, even though I'm fully one hundred percent on board that we need to prioritize Europe's competitiveness, We need to pry
veritize technological sovereignty. There's no security without prosperity. These are absolutely the right goals, But deregulation or just trying to kind of 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 USR.
Why the EU hasn't been as successful in building those tech companies, And I would argue with 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 signal market, the capital markets Union, rethinking cultural legal barriers to risk taking, like unity bankruptcy laws that deter the entrepreneurs from pursuing
really cutting edge, risky innovations. And I think very importantly that the EU has not being as successful as the United States in attracting local talent to innovating Europe.
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.
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 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 sound 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 this massive infrastructure building that 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's that would be high recipe for going forward.
Is there an issue with enforcement on some of these rules as well? You know, the Digital Markets Actor is this key piece of technology regulation the EU has. It's faced a lot of criticism from the Trump administration as well. The fine means being handed out under the DMA are relatively small amounts of money five hundred million euro three hundred 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.
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 box. It is a much harder thing to enforce them against powerful tech companies that can afford There are robust legal challenges those rules. But obviously now there's an additional concern around enforcement. When the Europeans a 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 to take that. The European politicians would say that we led the Trump administration to write the rules for Europe. But at the same time, I think there is certain pragmatism that that might be characterizing how finds 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 DNA, the Digital Markets Act and the DSA the Digital Services Act. Yet the Course Simplification agenda now focuses on the GDPR and the AI Act, which seemed to be more reflecting than the
internal pressures. I would say the conversation that change up the drug is report on competitiveness and what would be then the key legislators to make what would be then the key legislations to make sure that those impediments or at least alleged impediments for European growth exists but you know, 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.
Do you feel that they are navigating that correctly at that point that and striking that balance.
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.
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 Lampire is about.
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 for in terms of their own technological innovations. But I think there are many strengths that 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 the AI supply chain. There are also examples of European companies that are absolute key layers. Here, the Dutch ASML in terms of the equipment in the manufacturing layer of the supply chain's 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 important that the Europeans are determined to try and mitigate them as soon and as well as they can.
Are you optimistic about the future of the ease regulatory power in this area? It's something that you've apout your career tracking now.
In many ways, I think the Europeans are on the right side of history. It is very difficult for me to invasion the world that is best served by the possession that the United States has taken, where we hand over the governance of technology to these tech companies. They don't serve public interests. Mark zuckerprog 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 galancies. I think the geopolitical weaponization of these technologies has made it plain for the Europeans that the Europeans need to gradually devred 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 degree 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're 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 it will have the kind of confidence and conviction in defending its own values while being absolutely the resolute and ambitious in mitigating the kind of deficiencies that exist in Europe's own technological supply chain.
Okay, BROADFORSDT, thank you very much.