Europe… watches a technological revolution begin elsewhere, writes the rules for it, builds the authorities to supervise it, imposes the reporting — and only then wonders why so little of it is happening in Europe. Meta AI launched in the United States in 2023. Europeans did not receive even a stripped-down chatbot until March 2025.
Meta said the delay had lasted longer than it wanted because it had to navigate Europe’s “complex regulatory system.” The European version arrived without image generation, without multimodal features, and without training on European public content — the Irish Data Protection Commission having frozen that plan in 2024.
For years, EU policymakers congratulated themselves on becoming a “regulatory superpower.” They succeeded. The question is whether this ambition is sane for a continent with weak productivity, poor technological scaling, shallow capital markets and a widening income gap with the United States.
The stack of regulations that a firm must clear is not one law. It is the General Data Protection Regulation, the Digital Markets Act, the Digital Services Act, the AI Act, cybersecurity rules, consumer law, competition law, sustainability reporting, and then twenty-seven national implementations.
IMF analysis puts EU income per person, in purchasing-power terms, nearly 30 percent below the United States, with around three-quarters of the gap explained by lower productivity.
A fragmented capital market is less attractive when investment must finance compliance before it expands…. A technology sector is less competitive when the release of every model must be cleared through privacy law, platform law and an AI statute whose high-risk regime has already been postponed because the machine could not digest its own rules.
France’s contribution is the burden on the innovator to prove safety before anything can be permitted to exist, and a conception of public power as the author of economic life rather than its referee. This principle was written into EU environmental law and has since migrated, in practice, into digital regulation.
A continent that measures success by the rules it writes for other people’s inventions should not be surprised when the inventions keep being launched somewhere else.
[T]he IMF’s tariff-equivalent barriers are…. the residue of twenty-seven national licensing regimes, professional cartels and administrative procedures that Paris and Berlin never seriously surrendered and that smaller states copy.
France and Germany did not become European. Europe became Franco-German in its treatment of data and risk.
Europe has developed an extraordinary economic talent: it watches a technological revolution begin elsewhere, writes the rules for it, builds the authorities to supervise it, imposes the reporting — and only then wonders why so little of it is happening in Europe. Artificial intelligence (AI) has made the habit impossible to ignore. The habit is not an accident of Brussels. It is the Franco-German regulatory reflex, written into the treaties and then imposed on everyone else.
The train has left…
On September 8, 2026, Meta launched Muse, a personal agent with its own secure virtual computer. It does not merely answer questions. In Meta’s own words, it “actually does the work”: emails, travel plans, forms, customer service, tasks across applications. Within weeks it was available in the United States, Canada and Mexico. Europe was not on the list, and Meta offered no date for release there.
This failure is not a one-off. Meta AI launched in the United States in 2023. Europeans did not receive even a stripped-down chatbot until March 2025. Meta said the delay had lasted longer than it wanted because it had to navigate Europe’s “complex regulatory system.” The European version arrived without image generation, without multimodal features, and without training on European public content — the Irish Data Protection Commission having frozen that plan in 2024. Parity was postponed to a future that still has not arrived. Meta’s own public-policy director put the result plainly: products “get delayed or get watered down and European citizens and consumers suffer.”
Apple met the same wall. On June 8, 2026, it announced that the new AI-powered “voice,” Siri would not ship on iPhones and iPads in the EU with the rest of the release, “due to the Digital Markets Act.” Apple said it had offered technical alternatives but that the Commission had rejected them. There is no timetable for an EU launch on those devices. The European Commission replied that the decision was Apple’s alone and that the company had asked for an 18-month exemption rather than offer a compliant design. The practical result for the European user is the same either way: the feature exists, but Europe does not have it. Delayed access to innovation has become normal.
The regulatory superpower
For years, EU policymakers congratulated themselves on becoming a “regulatory superpower.” They succeeded. The question is whether this ambition is sane for a continent with weak productivity, poor technological scaling, shallow capital markets and a widening income gap with the United States.
The European Commission now admits that the costs are large enough to require a reversal. The Commission’s target is to cut administrative burdens by 25 percent for companies generally and 35 percent for small and medium companies, worth an estimated €37.5 billion a year by 2029. This figure is not from a libertarian think tank. It is the Commission’s own estimate of recurring costs it believes it can remove without abandoning its “other objectives” (which is the Commission’s Newspeak for “energy transition”— the European Union’s supreme goal in 2026.)
By early 2026, it had already tabled twelve “omnibus” simplification packages. Governments probably do not launch programs on that scale when paperwork is a marginal irritant. They do it when the paperwork has become the problem.
The stack of regulations that a firm must clear is not one law. It is the General Data Protection Regulation, the Digital Markets Act, the Digital Services Act, the AI Act, cybersecurity rules, consumer law, competition law, sustainability reporting, and then twenty-seven national implementations. The Commission itself conceded the growth trap in 2025 when it proposed special treatment for “small mid-caps”: companies that had crossed the small and medium enterprises threshold but suddenly faced a cliff of obligations that discouraged further growth. An innovative sector does not scale up when every new business model enters a maze.
The Single Market that is not one
The historic justification of the EU was a continental market that would give European firms the ability grow: scale. The market remains astonishingly incomplete, and the incompleteness is regulatory.
The IMF estimates that the barriers to selling goods across member states are equivalent, on average, to a tariff of about 45 percent. For services, the tariff equivalent is about 110 percent. Across American states, the equivalent barrier for goods is roughly 15 percent. Trade intensity between EU countries is less than half the trade intensity between US states. European Commission President Ursula von der Leyen has quoted the IMF figures herself: the Single Market’s internal barriers are “equivalent to a 45% tariff on goods. And a 110% tariff on services.”
Europe formally abolished tariffs between member countries decades ago. The accumulated burden of divergent rules, licences, standards, professional qualifications and national procedures has set them back — at an extraordinary magnitude. The IMF calculates that bringing its internal barriers down toward American levels could raise European productivity by almost 7 percent in the long run. Governments spend entire decades chasing gains of that size.
The productivity gap
IMF analysis puts EU income per person, in purchasing-power terms, nearly 30 per cent below the United States, with around three-quarters of the gap explained by lower productivity. According to current projections, the gap is not closing. Europe largely missed the productivity acceleration of the information-technology revolution. It has fewer technology giants, thinner public equity markets, fewer high-growth firms and less corporate research at the frontier.
Regulation is not the only cause. Energy costs matter as well. Regulation, however, interacts with all of them. A fragmented capital market is less attractive when investment must finance compliance before it expands. A small company is less likely to scale up when crossing a size threshold triggers another layer of obligations. A technology sector is less competitive when the release of every model must be cleared through privacy law, platform law and an AI statute whose high-risk regime has already been postponed because the machine could not digest its own rules.
It is not a technocratic accident that emerged in the headquarters of the European Commission. France and Germany exported their domestic regulatory turns to the rest of Europe and the treaties made the export binding on everyone else.
France’s contribution is the burden on the innovator to prove safety before anything can be permitted to exist, and a conception of public power as the author of economic life rather than its referee. This principle was written into EU environmental law and has since migrated, in practice, into digital regulation.
Germany’s contribution is the “data-protection” state. The constitutional right of “informational self-determination,” forged in the Federal Constitutional Court’s 1983 census judgment and shaped by an entirely intelligible post-war fear of registries, became the template for the General Data Protection Regulation, GDPR. German data-protection authorities remain among the most aggressive enforcers in the Union.
The two traditions disagree on many things. They do agree that the default setting for a new technology consists of a rulebook, an authority and a reporting obligation.
As the largest two member states, they dominate the Council. What begins as a French or German domestic preference soon becomes the law of Portugal, Ireland and Estonia. National gold-plating then adds a second layer: the IMF’s tariff-equivalent barriers are not Brussels tariffs; they are the residue of twenty-seven national licensing regimes, professional cartels and administrative procedures that Paris and Berlin never seriously surrendered and that smaller states copy.
The “regulatory superpower” is the external face of an internal fact: France and Germany did not become European. Europe became Franco-German in its treatment of data and risk.
The Commission’s simplification drive is a confession, not a change of regime. Twelve omnibus packages and a promise of €37.5 billion in savings by 2029 leave the architecture intact. The AI Act is deferred, not repealed. The Digital Markets Act is still the reason Apple gives for withholding Siri, and Muse is still unavailable.
A continent that measures success by the rules it writes for other people’s inventions should not be surprised when the inventions keep being launched somewhere else.
Europe is not being regulated into prosperity. It is being regulated out of the future — by a Franco-German reflex that was national, is now EU law, and that kills at both levels.
Europe is missing the AI train. By withholding the tools of artificial intelligence from its firms and its citizens, it is cementing the decline of the continent.
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