Speaker 1: Bloomberg Audio Studios, podcasts, radio news. So, Professor and a
Speaker 1: Bradfred from Columbia Law School, it's been fourteen years since
Speaker 1: you coined that term, the Brussels Effect to describe the
Speaker 1: e's global regulatory influence. If you could take us back
Speaker 1: to that point, what is it about the EU's global
Speaker 1: regulatory power that you were trying to encapsulate with that term.
Speaker 2: You know, Stephen, it was a very different world that
Speaker 2: the EU was living in, and it was the moment
Speaker 2: when the EU was extremely ambitious about building the regulations
Speaker 2: that we're advancing, its value around sustainability, around digital rights,
Speaker 2: and also interested in making sure that those rights are
Speaker 2: respected by foreign companies, and that then gave the EO
Speaker 2: this tremendous global unilateral regulatory power. But it was also
Speaker 2: the world in which other dimensions of power we're relatively
Speaker 2: not that more important as they are today. We didn't
Speaker 2: need to worry as much about the European military power.
Speaker 2: And there was a particular aspect where the EU really
Speaker 2: felt that it had influence. It had the influence to
Speaker 2: shape what products were produced and consumed, and that gave
Speaker 2: the EU certain, I would say, a power that had
Speaker 2: been not fully appreciated in the conversations about global influence.
Speaker 1: Where are we then, fourteen years on, has that power
Speaker 1: that influence diminished?
Speaker 2: I think it's fair to say that we are no
Speaker 2: longer the heyday of the Brussels Effect or regulation. I
Speaker 2: don't think it has entirely disappeared by any means. But
Speaker 2: at the same time, I would say that the EU's
Speaker 2: regulatory agenda faces tremendous challenges, both external and internal. We
Speaker 2: could not have imagined at the time that we would
Speaker 2: be having a Trump administration where the US is very
Speaker 2: aggressively at haacking Europe's regulatory sovereignty, basically forcing the EO
Speaker 2: to diminish some of those regulatory ambitions. And also then
Speaker 2: the internal pushback that is coming now from companies that
Speaker 2: is causing now the EO to some extent lose its
Speaker 2: own confidence in its regulatory agenda. When we are so
Speaker 2: worried about the EU's competitiveness, the use technological sovereignty, and
Speaker 2: there seems to be now a narrative that may be
Speaker 2: this commitment to regulations like digital regulation is standing in
Speaker 2: the way of achieving those goals.
Speaker 1: Well, let's talk about about that criticism. Then, I mean,
Speaker 1: how much of it is fair or legitimate that perhaps
Speaker 1: the EU did go too far in regulation. You know
Speaker 1: our efforts that the EU is making to simplify the regulations,
Speaker 1: as they put us a step in the right direction.
Speaker 2: Well, I generally would say that any responsible regulator, especially
Speaker 2: when you are trying to regulate a fast moving space
Speaker 2: like technology, needs to engage in regular self reflection and
Speaker 2: assess whether we have done it the right way. And
Speaker 2: especially if you look at the number of different regulations
Speaker 2: that have been passed in Brussels. Yes, there are probably
Speaker 2: some redundancy inconsistencies overlaps where some simplification is in order.
Speaker 2: So I'm not defending every provision of every rule coming
Speaker 2: out of Brussels.
Speaker 3: I think, for instance, the GDPR.
Speaker 2: Has been somewhat to burdens some especially for the small
Speaker 2: and medium sized companies, and maybe inadvertently entrance the power
Speaker 2: of the big tech who can better afford to engage
Speaker 2: in very costly regulatory compliance. But I'm more worried Stephen,
Speaker 2: that this conversation is now I think taking too much
Speaker 2: of the political space and energy in Brussels, because i think,
Speaker 2: even though I'm fully one hundred percent on board that
Speaker 2: we need to prioritize Europe's competitiveness, We need to pry
Speaker 2: veritize technological sovereignty. There's no security without prosperity. These are
Speaker 2: absolutely the right goals, But deregulation or just trying to
Speaker 2: kind of tweak the AI Act or the GDPR, they
Speaker 2: will do collectively very little to help the EU enhance
Speaker 2: that goal. So instead, I think we should be focusing
Speaker 2: on what the real problems and the sources of the
Speaker 2: so called innovation gap between the EU and the USR.
Speaker 2: Why the EU hasn't been as successful in building those
Speaker 2: tech companies, And I would argue with the reason is
Speaker 2: not ambitious digital regulation. It's the EU's failure to build
Speaker 2: those fundamental pillars of the tech ecosystem where the US
Speaker 2: has been much more successful, so the digital signal market,
Speaker 2: the capital markets Union, rethinking cultural legal barriers to risk taking,
Speaker 2: like unity bankruptcy laws that deter the entrepreneurs from pursuing
Speaker 2: really cutting edge, risky innovations. And I think very importantly
Speaker 2: that the EU has not being as successful as the
Speaker 2: United States in attracting local talent to innovating Europe.
Speaker 1: So are we looking in the wrong place then, to
Speaker 1: try and fix this problem. Is the EU being susceptible
Speaker 1: to the influence of the Trump administration in looking at
Speaker 1: the criticism at regulation rather than tackling those underlying issues.
Speaker 1: And can you do both? Can you innovate and grow
Speaker 1: while also having strong and robust rules.
Speaker 3: Absolutely.
Speaker 2: I think this has been portrayed as a false choice,
Speaker 2: that the EU either can afford to protect the digital
Speaker 2: rights or then it will be successful in innovating, And
Speaker 2: I think absolutely those two both are possible. So in
Speaker 2: many ways, I think in today's volatile world, the rules
Speaker 2: create some predictability, they create certainty, and I think it
Speaker 2: would be very difficult to claim that if you look
Speaker 2: at what is happening in the AI space, that it
Speaker 2: would be optimal not to have rules. I think there
Speaker 2: are genuine societal concerns and we need AI governance. So
Speaker 2: in many ways, I think the Europeans sound the right
Speaker 2: side of history. Even if you look at the conversations
Speaker 2: in the United States today, there's a lot of resistance
Speaker 2: now to this massive infrastructure building that data centers, the
Speaker 2: harms of that AI does to the mental health of
Speaker 2: the teenagers. So I think the EU should retain its
Speaker 2: confidence that it does need to protect fundamental rights, it
Speaker 2: needs to protect democracy, but at the same time it
Speaker 2: should show equal ambition in then building those pillars of
Speaker 2: an innovation ecosystem.
Speaker 3: So I think that's that would be high recipe for
Speaker 3: going forward.
Speaker 1: Is there an issue with enforcement on some of these
Speaker 1: rules as well? You know, the Digital Markets Actor is
Speaker 1: this key piece of technology regulation the EU has. It's
Speaker 1: faced a lot of criticism from the Trump administration as well.
Speaker 1: The fine means being handed out under the DMA are
Speaker 1: relatively small amounts of money five hundred million euro three
Speaker 1: hundred million euro versus, for example, what the competition rulings
Speaker 1: used to hand out when we were seeing massive decisions
Speaker 1: against American companies. Is there an issue Do you think too,
Speaker 1: that the rules, imperfect as they may be, are not
Speaker 1: being enforced.
Speaker 2: So I think the concern around enforcement dates back to
Speaker 2: the era before the US was pushing back on those regulations.
Speaker 2: It is one thing to have these ambitious laws in box.
Speaker 2: It is a much harder thing to enforce them against
Speaker 2: powerful tech companies that can afford There are robust legal
Speaker 2: challenges those rules. But obviously now there's an additional concern
Speaker 2: around enforcement. When the Europeans a navigating the growing pressures
Speaker 2: from the Trump administration. I think the Europeans do not
Speaker 2: want to be seen as capitulating. It is not a
Speaker 2: popular politically to take that. The European politicians would say
Speaker 2: that we led the Trump administration to write the rules
Speaker 2: for Europe. But at the same time, I think there
Speaker 2: is certain pragmatism that that might be characterizing how finds
Speaker 2: are being set, how enforcement priorities need to be at
Speaker 2: least communicated so that they do not provoke the kind
Speaker 2: of sentiment that the Europeans would be going after the
Speaker 2: American companies. But I think it is notable that the
Speaker 2: Trump administration has primarily attacked the DNA, the Digital Markets
Speaker 2: Act and the DSA the Digital Services Act. Yet the
Speaker 2: Course Simplification agenda now focuses on the GDPR and the
Speaker 2: AI Act, which seemed to be more reflecting than the
Speaker 2: internal pressures. I would say the conversation that change up
Speaker 2: the drug is report on competitiveness and what would be
Speaker 2: then the key legislators to make what would be then
Speaker 2: the key legislations to make sure that those impediments or
Speaker 2: at least alleged impediments for European growth exists but you know,
Speaker 2: there is an argument that we are not necessarily seeing
Speaker 2: as high fines when the EU is navigating between committing
Speaker 2: to its own regulatory priorities yet maybe trying to some
Speaker 2: extent navigate at least implicitly some of the pressures from
Speaker 2: the Trump administration, but the enforcement is going forward.
Speaker 1: Do you feel that they are navigating that correctly at
Speaker 1: that point that and striking that balance.
Speaker 3: No, I think it's really difficult to say. In many ways,
Speaker 3: I would.
Speaker 2: Say that the Europeans need to be very clear that
Speaker 2: they have little to gain by capitulating to the demands
Speaker 2: of the Trump administration because those will continue. There is
Speaker 2: no way to buy stability. There is no way for
Speaker 2: the Europeans to say that if we refrain from bringing
Speaker 2: this and this case against this company, that somehow the
Speaker 2: demands would stop. If the Europeans seem to be giving in,
Speaker 2: then the next demand will follow the next day, or
Speaker 2: the next week, or the next month. So I think
Speaker 2: then you set the dynamic for Europe's regulatory agenda from
Speaker 2: which the Europeans cannot emerge as winners. So in that sense,
Speaker 2: I think there should be very little impetus to give
Speaker 2: in when it comes to pressures from the Trump administration.
Speaker 1: Can the EU in its current form compete globally with
Speaker 1: the US on one side China on the other. This
Speaker 1: is something that you've written another book, Digital Lampire is about.
Speaker 2: So there are many challenges and the weaknesses that the
Speaker 2: Europeans have. If we think about the AI race, for instance,
Speaker 2: there are many who describe the race as being just
Speaker 2: between the US and China. Those are the sources for
Speaker 2: large language models. The Europeans don't have as much to
Speaker 2: show for in terms of their own technological innovations. But
Speaker 2: I think there are many strengths that the Europeans have.
Speaker 2: For instance, if we think about the artificial intelligence, what
Speaker 2: really matters is not just that we have the energy intensive,
Speaker 2: capital intensive large language models.
Speaker 3: What matters is how you actually make this.
Speaker 2: AI serve the company, serve the society, what the applications are,
Speaker 2: how AI will be adopted across the various verticals.
Speaker 3: Of the economy.
Speaker 2: And there's no inherent disadvantage that the Europeans have on
Speaker 2: that very important layer of the AI supply chain. There
Speaker 2: are also examples of European companies that are absolute key layers. Here,
Speaker 2: the Dutch ASML in terms of the equipment in the
Speaker 2: manufacturing layer of the supply chain's key to the semiconductors. So, yes,
Speaker 2: there are European success stories, but yes there are many challenges.
Speaker 2: There are technological dependencies and vulnerabilities, and I think it
Speaker 2: is important that the Europeans are determined to try and
Speaker 2: mitigate them as soon and as well as they can.
Speaker 1: Are you optimistic about the future of the ease regulatory
Speaker 1: power in this area? It's something that you've apout your
Speaker 1: career tracking now.
Speaker 2: In many ways, I think the Europeans are on the
Speaker 2: right side of history. It is very difficult for me
Speaker 2: to invasion the world that is best served by the
Speaker 2: possession that the United States has taken, where we hand
Speaker 2: over the governance of technology to these tech companies. They
Speaker 2: don't serve public interests. Mark zuckerprog doesn't wake up in
Speaker 2: the morning and ask the question what he can do
Speaker 2: for democracy today. I think Europeans do need to assert
Speaker 2: the democratic governance of our digital future, but at the
Speaker 2: same time, I recognize we can't be naive about some
Speaker 2: of the galancies. I think the geopolitical weaponization of these
Speaker 2: technologies has made it plain for the Europeans that the
Speaker 2: Europeans need to gradually devred both from Chinese and American technologies.
Speaker 2: That means building alliances with other like minded middle partners.
Speaker 2: It also means enhancing Europe's own sovereign technological capabilities. But
Speaker 2: it will mean still for the years to come, some
Speaker 2: degree of collaborations with the Americans to some extent with Chinese.
Speaker 2: There is no country in the world that can be
Speaker 2: entirely completely technologically sovereign.
Speaker 3: That is not even available for the United States.
Speaker 2: The United States also needs allies, even Europe more than
Speaker 2: it often admits, and China needs other partners as well.
Speaker 2: And I think that also means that we're not seeing
Speaker 2: a fully decoupled global economy. And I think it's just
Speaker 2: a terminus time for the Europeans and for the rest.
Speaker 3: But I'm never giving up on Europe.
Speaker 2: I think there are many great strengths that Europe has,
Speaker 2: and now I just hope it will have the kind
Speaker 2: of confidence and conviction in defending its own values while
Speaker 2: being absolutely the resolute and ambitious in mitigating the kind
Speaker 2: of deficiencies that exist in Europe's own technological supply chain.
Speaker 1: Okay, BROADFORSDT, thank you very much.