The EU is regulating itself into digital oblivion

Europe’s blunderbuss approach to technologies like AI is an opportunity for a sovereign Britain

America innovates, China duplicates, and Europe regulates. But where does Brexit Britain fit into this caricature of economic behaviour? As if to prove the point about Europe, along comes a 108-page mind-bender of proposals from Margrethe Vestager, the European Commission official responsible for overseeing the EU’S digital policy, for regulating the emerging industry of Artificial Intelligence – or “strangling it at birth” as one interested observer caustically puts it.

Ms Verstager naturally disagrees; for her it is about Europe being ahead of the game, setting the standards for everyone else to follow, and answering public concerns about the march of the smart machines. “On artificial intelligence, trust is a must, not a nice-to-have,” she says. “With these landmark rules, the EU is spearheading the development of new global norms to make sure AI can be trusted.”

Yet, well-intended though her safeguards may be, they are also a further example of the economic handicap Europe routinely applies to itself via the “precautionary principle” that instructs its affairs.

However much the EU might protest otherwise, more attention is being paid to the risks of machine learning than its opportunities. Some forms of it, such as live facial recognition, are to be banned outright, excepting national security usage, and others seem likely to be quite severely hampered by the EU’S obsession with “safety first” priorities and “fundamental rights”.

Already, the EU has some of the world’s most extensive, and arguably oppressive, forms of data regulation. It has also been at the forefront of attempts to crack down on the power of the major tech companies. And they wonder why Europe has been so poor at spawning any tech giants of its own. Nothing to compare with America’s Microsoft, Amazon, Apple and Google, or China’s Alibaba, Tencent, Baidu and Huawei, has yet emerged from the once thriving inventiveness and diversity of the European continent.

Europhiles blame still fragmented markets, cultures, legal systems and differences of language, pledging to harmonise them all away in pursuit of the critical mass of the American and Chinese models. Yet in so doing, they look backwards, not forwards; rather than embracing the new, they attempt to imprison it. With Britain’s influence removed, these traits are likely to become even more dominant, thereby condemning Europe to the slow lane.

This is not to deny that risks exist. AI is awash with ethical and market access concerns. As it currently exists, it is almost entirely built around the harvesting of vast amounts of personal data; in analysing this information, machines are able to make decisions on their own, raising multiple issues around privacy and morality. Nor does anyone deny the wider challenges including the threat to jobs and the possibility that, by perpetuating and entrenching established ways of operating, AI might actually harm innovation, not advance it.

All the same, the opportunity for Britain in regulatory divergence from Europe is obvious. The European response to AI is one of the blunderbuss – to act first and ask questions later. There are potentially big gains to be had from a nimbler, more pragmatic, growth friendly approach. Let the market evolve as it wants, and address its less desirable consequences as we go along.

There is very little point in leaving the EU if only to apply newly won freedoms to merely mirroring whatever it is our near neighbours are doing. If that’s where we are heading, we should have stayed in, and argued the toss from a position of influence.

This is not about a “race to the bottom”, or any other such nonsense; it is about providing an environment where business and enterprise can thrive, delivering the productivity growth that we once took for granted but, in de-risking our economies, have somehow managed to lose.

Already there is a model for the kind of approach the UK might pursue in the newly independent Medicines and Healthcare products Regulatory Agency. Speedy authorisation of Covid jabs helped put the UK months ahead of much of Europe in its vaccine rollout, saving tens of thousands of lives, and allowing the economy to progressively ease its way out of lockdown. The reason why the MHRA missed the blood clotting side effects is that they were so vanishingly rare that they didn’t show up in trials, only emerging once millions had been vaccinated. Yet there is no doubt where the balance of public good lies.

European regulators claim vindication, but at what cost to the economy and lives at large? In this, as in so many other cases, the precautionary principle has done more harm than good. A certain amount of wariness is natural when dealing with the new, but, taken to extremes, it becomes the enemy of progress.

The breakthrough potential of AI is quite possibly being overhyped; is it, for instance, likely to prove as transformational as electricity, the car, the airplane or even the telephone? I for one will take some convincing. But there is little doubt about its economic and possibly liberating promise; let’s not stand in its way.