STOCKHOLM — Executives at U.S. tech giants Google and Meta said that Europe’s artificial intelligence industry is being held back by excessive regulation, adding to rhetoric from Donald Trump’s administration that the region’s strict tech rules are choking innovation.

Speaking at the Techarena tech conference in Stockholm, Sweden, public policy chiefs at both Google and Meta used the stage as a platform to voice their concerns about the bloc’s strict approach to regulating technologies such as AI and machine learning.

“I think there is now broad consensus that European regulation around technology has its issues, and sometimes it’s too fragmented, like GDPR [General Data Protection Regulation], sometimes it goes too far, like the AI Act,” Chris Yiu, Meta’s director of public policy, told an audience of tech founders and investors at Techarena on Thursday.

“But the net result of all of that is that products get delayed or get watered down and European citizens and consumers suffer,” he said.

Yiu pulled out a pair of Meta’s recently launched Ray-Ban branded glasses, which use AI to translate speech from one language to another or describe images for the visually impaired.

“This is a profound and very human application of the technology, and it is slow to arrive in Europe because of the issues that we have around regulation,” Yiu said.

Meta only began rolling out AI features for its Ray-Ban Meta glasses in some European countries in November, after a delay the firm claimed was caused by the need to reach compliance with Europe’s “complex regulatory system.”

Meta previously expressed concerns about its ability to comply with the AI Act, a landmark EU law that establishes a legal and regulatory framework for the technology, flagging “unpredictable” implementation was a core issue.

The firm also said that GDPR — the EU’s data privacy framework introduced in 2018 — held up the launch of its glasses in EU countries due to issues surrounding Meta’s use of Instagram and Facebook user data to train its AI models.

Dorothy Chou, Google DeepMind’s head of public policy, said a key problem with Europe’s approach to regulating artificial intelligence technology was that the the AI Act was devised before ChatGPT had even come out.

The AI Act was first introduced by the European Commission, the EU’s executive body, in April 2021. OpenAI launched ChatGPT in November 2022.

“There is a way to use policy to create a better investment environment when it’s done in a way that promotes business” Chou said, referring to the U.S. Inflation Reduction Act as an example of policy that has led to benefits, like subsidies for electric vehicles.

“I think what’s difficult is when you are regulating on a time scale that doesn’t match the technology,” Chou added. “I think what we need to do is both regulate to ensure that there is responsible application of technology, while also ensuring that the industry is thriving it all the right ways.”

Big Tech firms more generally have been upping their rhetoric against the EU’s approach to tech regulation and ramping up lobbying efforts in an attempt to soften aspects of the AI Act.

Kent Walker, Google’s president of global affairs, told Politico last month that the EU’s code of practice for general-purpose AI (GPAI) models — which refers to systems like OpenAI’s GPT family of large language models, or LLMs — was a “step in the wrong direction.”

The EU AI Office, a newly created body overseeing models under the AI Act, published a second-draft code of practice for GPAI systems in December.

Earlier this month, Meta’s newly appointed Chief Global Affairs Officer Joel Kaplan suggested in a live-streamed interview at an event in Brussels that the tech giant would not sign up to the code in its current form.

The rules, he said, go “beyond the requirements” of the AI Act and impose “unworkable and technically unfeasible requirements.”

Tech giants’ pleas for softer EU tech regulation have been emboldened of late by President Donald Trump’s new administration.

At the international AI Action Summit in Paris last week, U.S. Vice President JD Vance blasted Europe for being too heavily focused on regulating artificial intelligence rather than embracing the technology’s growth potential.

Harmonizing EU rules for startups

Big Tech weren’t alone in calling for a more simplified regulatory regime for technology firms operating in Europe.

Several venture capitalists investing in European tech startups also decried complex regulatory compliance burdens on their portfolio companies.

Antoine Moyroud, a partner at Lightspeed Venture Partners, said that whereas the U.S. has been pushing forward initiatives such as the $500 billion Stargate investment project that strike a “hopeful” message around AI,” Europe’s narrative tends to be more “dramatic.”

The region needs to start thinking “beyond GDPR, beyond the EU AI Act” and producing technological success stories to get people “excited” about the promise of the technology.

Lightspeed are investors in French AI unicorn Mistral, which is often touted as Europe’s key competitor to OpenAI.

Last year, tech entrepreneurs in the region proposed a new initiative to address fragmented market regulations across the 27-member bloc by establishing a so-called “28th regime.” These proposed legal frameworks within the EU offer firms an alternative to member states’ own national rules, rather than replacing them.

For example, there’s a European Company Statute under the 28th regime that makes it simpler to set up public limited liability companies in the EU.

The likes of Stripe CEO Patrick Collison and Wise co-founder Taavet Hinrikus are among the startup founders looking to set up a new entity under the 28th regime, called “EU Inc.”

“Europe is a fragmented place, and what you want to do is [to] be able to hire across any country,” Luke Pappas, a London-based partner for venture capital firm NEA, told CNBC in an interview on the sidelines of Techarena.

A key issue with attracting talent in this way, according to Pappas, is that currently “the process of giving equity cross border in Europe is not very easy.”

“If we can standardize equity, for example, that will dramatically help,” he added.

DeepSeek’s sudden splash in the large language model space has given China a powerful tool to catalyze artificial-intelligence adoption in the country and boost economic growth.

While Goldman Sachs pegs a 20-basis-point to 30-basis-point boost to China’s GDP over the long term — by 2030 — its expects the country’s economy to start reflecting the positive impact of AI adoption from next year itself as AI-driven automation improves productivity.

“The recent emergence of DeepSeek … suggests faster AI development and adoption in China than we previously anticipated,” economists at the Wall Street bank said.

The enthusiasm around DeepSeek is also being reflected in the sharp rally in China stocks, with the MSCI China index soaring over 21% from its January low, according to LSEG data.

The startup’s rise is triggering a reassessment of China’s “investability” after an extended period of limited attention, Morgan Stanley said in a note this week.

“DeepSeek demonstrates that China is at or near the cutting edge of AI development, which boosts the prestige of China’s economy and tech ecosystem, making them more attractive for global investors,” said Gabriel Wildau, managing director at Teneo.

The company’s launch of a cheaper and more efficient AI model came as a timely confidence boost as the Chinese leadership faces a prolonged economic gloom, partly owed to the slump in its property market, while the specter of a fierce trade war with the U.S. looms large.

DeepSeek’s R-1 reasoning model has been lauded as being able to match, or even outperform, leading global AI offerings amid claims of running on cheaper and less sophisticated chips. The open-source model also can be repurposed by developers outside the company to significantly boost efficiency at a lower operating costs.

The startup has shaken China’s AI ecosystem as well, with state-owned entities as well as large tech players, including competitors, leveraging its open-sourced architecture.

“The scale and speed of [AI] adoption [in China] is amazingly fast right now, and it’s not slowing down,” said Wei Sun, principal analyst of artificial intelligence at Counterpoint Research.

Chinese leadership last year vowed “a leap forward” by spurring new growth drivers based on innovation in advanced sectors, such as AI and semiconductors, as U.S. export controls on advanced equipment and the most advanced semiconductors thwarted its ability to make major tech breakthroughs.

With Beijing signaling support for the startup, a growing number of local governments, from Hohhot in northern China to the southern city of Guangzhou and Shenzhen, are launching DeepSeek-powered “public servants” to automate governance, handling requests from administrative paper work to general public services.

At least three state-owned telecommunications operators have also adopted the cutting-edge model in recent weeks.

Private businesses have tapped the new model to see how it can improve productivity. Automakers, financial services companies, smartphone makers and cloud computing operators including Alibaba, Huawei and Tencent have rushed in recent weeks to integrate with DeepSeek.

“With DeepSeek becoming a global household name in a matter of weeks, Beijing is [using it as an opportunity] to showcase China’s tech champions and demonstrate Chinese tech resilience and innovation in the face of US-led controls,” said Reva Goujon, director at Rhodium Group.

A Pew study in 2023 found that 19% of U.S. workers are in jobs with high exposure to AI. That study used the term “exposure” as it’s unclear whether AI’s impact will be positive or negative.

While AI application may cause the number of displaced workers to rise in the near term, these workers will eventually find jobs in other sectors where labor has a competitive advantage, helping employment to grow again, Goldman said.

— CNBC’s Dylan Butts, Evelyn Cheng contributed to this report.

Executives at Meta stand to get bigger bonuses this year. 

The company said in a corporate filing Thursday that it had approved “an increase in the target bonus percentage” for its annual bonus plan for executives. Meta’s named executive officers could earn a bonus of 200% of their base salary under the new plan, up from the 75% they earned previously, according to the filing. 

The updated bonus plan doesn’t apply to Meta CEO Mark Zuckerberg, the filing noted.

A committee for Meta’s board of directors approved the change after determining that the “target total cash compensation” for its executives “was at or below the 15th percentile of the target total cash compensation of executives holding similar positions” at peer companies. 

“Following this increase, the target total cash compensation for the named executive officers (other than the CEO) falls at approximately the 50th percentile of the Peer Group Target Cash Compensation,” the filing said.

The approval of the new executive bonus plan comes a week after Meta began laying off 5% of its overall workforce. The company had previously said this would impact its lowest performers.

Meta also slashed its annual distribution of stock options by about 10% for thousands of employees, according to a report published Thursday by the Financial Times. The report noted that the stock-option reduction may differ based on where the workers live and their position at the company.

Meta shares are up over 47% over the past year and closed Thursday at $694.84, underscoring  investor enthusiasm over the social media company’s growing sales in the digital advertising market and the potential for its AI investments to eventually generate big returns.

The company said in January that its fourth-quarter revenue grew 21% year over year to $48.39 billion.

Meta did not reply to a request for comment.

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