In the urgent global race for technological supremacy, Europe finds itself increasingly entangled in a regulatory morass of its own making. While the United States and China surge ahead in fields like artificial intelligence, autonomous vehicles, and biotechnology, the European Union’s proclivity for regulation risks pushing it to the periphery of innovation.
The numbers paint a stark picture. Recent research by Jonas Herby from the Danish think-tank Cepos shows that since the implementation of the Maastricht Treaty three decades ago, EU legislation has ballooned by a staggering 729 percent. Even more alarmingly, the regulatory burden has doubled in the mere 14 years since the Lisbon Treaty came into effect. This exponential growth in red tape coincides with a period of tepid economic performance across much of the continent, raising uncomfortable questions about the relationship between overregulation and stagnation.
As Enrique Dans, a professor of innovation at IE University, rightly observes, “Europe has become a continent that pretends to make regulation its competitive advantage.” This strategy, however, appears increasingly self-defeating. Rather than fostering innovation, it’s driving it away. Tech giants like Tesla and Apple are now routinely delaying or outright withholding their most cutting-edge products and services from European markets, wary of running afoul of the EU’s byzantine regulatory framework. Moreover, the consequences of this regulatory overreach extend far beyond mere inconvenience for European consumers. It strikes at the heart of the continent’s competitiveness and future prosperity. In an era where technological advancement is the primary driver of economic growth, can Europe afford to be left behind?
The EU’s regulatory zeal is not without its defenders, who argue it protects consumer rights and privacy. Yet, as Dr. Dans asks, “Are we willing, as citizens, to accept that our regulator treats us like idiots who cannot enjoy a product or service because we don’t know how to protect our rights?” This paternalistic approach risks infantilizing one of the world’s most educated populations and stifling the very innovation it purports to guide responsibly.
Moreover, the EU’s strategy of regulation-as-competitive-advantage rests on increasingly shaky ground. As global tech firms begin to view Europe as a secondary market, the continent risks losing its leverage. The EU may soon find itself in the unenviable position of trying to regulate technologies it neither creates nor produces, a scenario that could render its elaborate rulebooks effectively toothless.
The way forward is clear, albeit politically challenging. Europe must adopt a model of what Adam Thierer calls “permissionless innovation,” an approach that asserts that unless there is compelling evidence an invention will cause serious harm to society, innovation should be allowed to proceed unimpeded. This philosophy recognizes that excessive caution can be disastrous, as attempts to preemptively regulate every worst-case scenario often stifle the realization of best-case outcomes. By embracing this model, Europe would significantly reduce its regulatory burden, creating an environment where entrepreneurs and companies can experiment and innovate without fear of running afoul of overzealous regulators. This does not mean abandoning all oversight, but rather refocusing regulation on core principles that protect fundamental rights while allowing for maximum flexibility and innovation. It is a delicate balance, but one that could unleash Europe’s latent innovative potential, enabling the continent to compete more effectively on the global stage. Such a shift would necessitate a seismic change in the EU’s regulatory tradition. Instead of trying to anticipate and legislate for every possible scenario, regulators should adopt a more responsive, adaptive approach. This could involve creating regulatory sandboxes where new technologies can be tested in controlled environments, or implementing sunset clauses that automatically review and potentially retire regulations after a set period.
In a nutshell, Europe’s regulatory burden has become unsustainable, threatening its ability to compete in the global innovation race. To reclaim its position as a technological leader, the EU must dramatically reduce its regulatory footprint and embrace a “permissionless innovation” model that encourages experimentation and entrepreneurship while protecting core rights.
