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Europe Is at Risk of Lagging in AI Agents

Christophe Carugati

27 June 2024

Generative AI

The future promise of AI agents is threatened by Europe's regulatory hurdles on data and business practices of large online platforms. European regulators must act swiftly to support AI innovation.

Artificial Intelligence (AI) is advancing rapidly and disruptively. Since the release of ChatGPT in November 2022, AI has become a fundamental technology, driving a surge of new models and AI-powered applications, such as chatbots. Businesses and individuals have adopted these technologies at an unprecedented pace, unlike anything seen in previous industrial revolutions. However, despite the promise of a future enhanced by AI agents, Europe's regulatory environment is hindering their development.


AI agents, acting as personal assistants, can perform a range of complex tasks on behalf of users. For instance, AI agents can plan an entire trip, from choosing the destination and booking hotels and flights to providing personalised activities based on the user’s interests. These agents can deliver significant economic benefits. For example, the fintech company Klarna has introduced an AI assistant that now handles two-thirds of its customer service chats. This innovation has saved consumers time, reduced the need for human customer service representatives, and ultimately increased Klarna's profitability.


The competition for developing AI agents is fierce. Within a few months, major tech companies like OpenAI, Google, Microsoft, Meta, and Apple announced their AI assistants with advanced capabilities. These firms are well-positioned to lead in this area because they already facilitate interactions between businesses and users and have access to valuable data necessary to provide relevant context to AI agents.


However, these tech giants face significant regulatory hurdles in Europe. Meta, for instance, sought to develop its models using publicly available personal data but had to pause following concerns from its lead data protection authority, the Irish data protection authority, regarding compliance with the European General Data Protection Regulation. This setback is delaying the development and launch of Meta's AI assistant in Europe. Similarly, Apple’s AI agent, Apple Intelligence, intended as a new feature of its operating system, is facing delays due to concerns with the European Digital Markets Act (DMA). The DMA regulates business practices of large online platforms acting as “gatekeepers”—unavoidable trading partners—with a list of obligations and interdictions. It requires Apple to offer third-party access to certain functionalities of its operating system for free, ensuring only strictly necessary privacy and security measures to protect the integrity of the system. Apple is currently challenging this provision before the European Court of Justice, arguing that it is inconsistent with the European Charter of Fundamental Rights and the principle of proportionality. Apple is now seeking clarification from the DMA regulator, the European Commission, before launching Apple Intelligence in Europe. Google, too, has withheld the launch of its new AI answer functionality, Google AI Overviews, in Europe, likely due to concerns over DMA compliance, which restricts Google from promoting its own services over those of its rivals in Google Search.


As a result, European businesses and consumers risk falling behind their global counterparts. While other regions capitalise on innovative AI agents, Europe may miss out on these advancements, placing its industries and users at a competitive disadvantage and deepening its already lagging position behind the United States and China in AI investments.


Europe cannot wait and watch if it wants to stay competitive with other leading regions. It must urgently seize the opportunities presented by AI agents. European regulators need to provide legal certainty to address the legitimate concerns about data usage and the business practices of large online platforms. The High-Level Group of the DMA represents a promising initiative to ensure a consistent regulatory approach. Composed of European regulatory bodies responsible for data protection, consumer protection, competition, audiovisual media, and electronic communications, alongside the Commission, the group has already publicly expressed its intention to ensure consistency in AI across the DMA and other legal frameworks, like data protection and content moderation. But more than intention is needed. The group must quickly adopt an initiative similar to its counterpart in the United Kingdom, the Digital Regulation Cooperation Forum (DRCF), which supports firms through the DRCF AI and Digital Hub, helping them innovate by providing support on novel and cross-regulatory issues.


Generative AI

Competition Policy

About the paper

This paper is part of our GenAI and Competition Hub, which strives for responsible generative AI (GenAI) development, ensuring favourable market conditions that benefit all. We help solve your challenges through impartial, high-quality research, strategic solutions in data, AI, and competition, stakeholder engagement, insights, and policy recommendations on complex policy developments. Contact us to join the Hub or for consultation/press inquiries.

About the author

Christophe Carugati

Dr. Christophe Carugati is the founder of Digital Competition. He is a renowned and passionate expert on digital and competition issues with a strong reputation for doing impartial, high-quality research. After his PhD in law and economics on Big Data and Competition Law, he is an ex-affiliate fellow at the economic think-tank Bruegel and a lecturer in competition law and economics at Lille University.

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