New Report from PPI Calls for EU to Support AI Innovation

March 31, 2021

A new report released today by the Progressive Policy Institute calls on the European Union to support artificial intelligence (AI) industry growth and innovation by enacting targeted reforms to help small and medium-sized enterprises (SMEs) in Europe succeed. The report also calls on the EU to consider policies to facilitate the emergence of a highly-skilled technical workforce, and strike a balance between consumer protections and overly burdensome regulations.

Report authors Caleb Watney and Dirk Auer outline the existing regulations that hamper the development of AI systems in the EU, as well as the unique promise AI holds for SMEs. Unlike the United States and China, the EU has largely failed to foster global players in the digital platform industry. Of the 30 largest internet companies in the world, only one is European. Those in the EU’s tech industry are smaller players who often rely on foreign AI platforms – mostly American – to boost AI adoption. The EU’s protectionist tax and trade measures hamstring these platforms, stifle innovation and limit job creation in Europe.

“There’s a real opportunity here for the EU to bootstrap the AI adoption process for their SMEs and become a global player in the tech industry. But it won’t happen without smart investment in public datasets, increased regulatory certainty, and an openness to working with rather than against US firms,” said Caleb Watney, Director of Innovation Policy at PPI.

Artificial intelligence is already being used across a wide range of domains to decrease power costs, improve logistics and sourcing systems, predict cash flows, streamline legal analysis, aid in drug discovery, improve factory safety conditions, and identify logistics efficiencies. This is in addition to opening up entirely new fields like autonomous vehicles, drone delivery systems, and instantaneous language translation. While many of AI’s most eye-catching use cases will likely remain the preserve of large platforms, the technology also holds tremendous promise for SMEs.

Key policy recommendations in the brief include:

Data investment as a public good:

Where appropriate, align incentives for the private sector to contribute industry-level SME data to public and private data trusts that could be used by everyone.
Invest in making more government datasets open to the public.
Fund Focused Research Organizations or similar groups with the explicit goal of creating new scientific and commercial public datasets.

Provide regulatory certainty:

Clarify existing regulations and the obligations that SMEs must meet when utilizing a new AI tool.
Consider the creation of a new SME regulatory website that provides informational resources to SMEs about the benefits of AI adoption for their business and the potential roadblocks that they need to be aware of.
Before promulgating new regulations or regulatory bodies, closely scrutinize the ecosystem to see if the same goal could be better achieved through existing industry specific regulations or fine adjustments to liability laws.

Encourage an ecosystem of AI platforms:

Avoid protectionist tax and trade policies that make it difficult for international AI platform companies to serve EU SMEs.
Invest in the creation of open-source AI platforms that could be utilized by SMEs and create a forum for receiving feedback on the types of tools that would be most useful for SMEs.
Articulate best practices on the member state level for encouraging AI adoption so that the best ideas can be identified and quickly adopted elsewhere.

Expand the AI talent pool

Encourage upskilling of the EU population by offering to cover a portion of the costs of specialized AI training courses.
Reevaluate EU immigration pathways to make them more attractive for international technical talent.
Facilitate global knowledge spillovers by removing potential obstacles to cross-border M&A.