The EU AI Act is expected to introduce its key rules for general-purpose AI (GPAI) models on August 2. However, amid growing concerns that over-regulation could erode Europe’s competitiveness in artificial intelligence, calls to postpone the roll-out have intensified from some key stakeholders, including Swedish Prime Minister Ulf Kristersson, Bosch CEO Stefan Hartung, and the tech lobbying group CCIA Europe, whose members include Alphabet, Meta, and Apple.

At TNW Conference in Amsterdam on June 20, Eoghan O’Neill, senior policy officer at the AI Office of the European Commission, addressed the potential delay of the roll-out. He clarified that the Commission plans to finalise its rules for GPAI in July. The European Parliament will then adopt its position on the standards.

“This is a big, sophisticated technology, and we want to get it right,” he said. “We need specific obligations to capture some of the most impactful or potentially harmful models under the AI Act.”

O’Neill highlighted that the guidelines were drafted by a broad code of practice group. Members included major model providers, civic society organisations, NGOs, academics, AI safety experts, SMEs, and European industrial giants. “It is a big tent with all of those voices from the stakeholder community”, he said.

Tech leaders, however, warned that the EU needed to reduce its regulatory burdens.

“Europe is not the United States,” said Fabrizio Del Maffeo, CEO at Axelera AI, a Netherlands-based chip company. “We have many languages, many markets, and many regulations – both European and local. And these are stifling growth because they create borders, making it difficult for companies to expand.”

Del Maffeo said his company had signed the petition for “EU Inc,” a proposal to create a standardised legal entity for startups that would enable easier operations across EU member states.

EU Inc would sit under the bloc’s 28th regime, a pan-European legal framework designed to help startups expand throughout the union. In a speech at the Davos economic forum in January, Commission President Ursula von der Leyen said the rules would combine “corporate law, insolvency, labour law, [and] taxation” in “one single and simple framework.”

But regulation isn’t the only problem, Del Maffeo stressed. The obsession with launching new startups needs to be balanced with a focus on scaling existing ones, which, he argued, requires capital more than policy.

The data backs him up: Europe accounts for just 8% of the world’s scaleups, compared with 60% in North America, and no EU-founded startup in the past 50 years has surpassed a €100bn valuation. The region is the birthplace of countless innovations, but struggles to turn them into big businesses.

“If you look at machine builders, we are leading the world,” he said. “In automotive, we are great, but we are losing traction. In robotics, we do great, but we are also losing traction.”

Peter van der Putten, director of the AI Lab and lead scientist at software firm Pegasystems, echoed this view. He emphasised that the EU needs to become more attractive for investments, both domestic and international.

Funding data underlines the investment gap: European startups raised about $52bn (€44bn) in venture capital last year — far less than the $209bn (€177bn) their US counterparts attracted.

“Investment could come from the EU, but also from the US,” van der Putten said. “Regulations could be adjusted to make it easier and more attractive for funding that’s leaving the US to flow into Europe.”

Europe is also in a good position to attract talent back from the US, noted Elise de Reus, co-founder of Cradle. She pointed to a growing trend of European engineers returning from Big Tech jobs in the US, drawn by purpose-driven work and better quality of life.

“We’re welcoming European engineers who used to work at Big Tech companies like Facebook in the US to come back and contribute to solving societal and global problems such as climate change,” she said.

“We’re also maybe a little bit too modest. We should measure happiness, not GDP, which is not a sustainable metric. I don’t think we should copy and paste the American system.”