EU AI rules are stifling European tech companies, CEO says

European Union artificial intelligence legislation has burdened technology companies and contributed to their failure to match the growth of US competitors, Hilmar Veigar Pétursson, CEO of Fenris Creations, told mbl.is.

He said European companies also faced greater difficulty raising the enormous amounts of capital needed to compete at the forefront of artificial intelligence. Icelandic EU membership could drive technology companies out of the country, he said.

Emergency patch to the legislation

Speaking on the Spursmál programme, Hilmar specifically referred to French AI company Mistral and Dutch technology giant ASML, both of which have raised serious concerns about the development of the rules. The EU subsequently had to apply what he called an “emergency patch” to the legislation.

The EU has since changed how its AI Act is implemented through what is known as the AI Omnibus, partly to reduce administrative burdens, increase legal certainty and make it easier for smaller companies to comply with the rules.

Hilmar said one particularly striking aspect of the issue was that the EU began drafting its AI legislation before ChatGPT was released and before the current AI revolution had taken its present form.

“A lot of this legislation had already been written before it came out, and it did not occur to anyone that ChatGPT would come into existence,” he said.

Hilmar described the legislation as an example of the problems he believes the EU has created through its regulation of the technology sector. When the rules were developed, he said, lawmakers were effectively trying to predict what artificial intelligence might look like in the future.

That future turned out differently, he said. In his view, the legislation was poorly adapted to the reality that emerged and instead reflected an imagined world created by European bureaucrats. He also criticised the risk classification of AI systems on which the legislation is based, calling it “a great deal of science fiction”.

Little value in a “0.1 seat”

Hilmar made the comments when asked whether Icelandic EU membership would reduce the country’s opportunities for growth and value creation.

Supporters of membership often point out that much of the EU’s regulatory framework already reaches Iceland through the European Economic Area Agreement, arguing that Iceland would therefore be better off as a full member with a seat at the table.

Hilmar dismissed that argument, saying he did not believe a “0.1 seat at the table” would make much difference.