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The Geopolitics of AI Regulation

The Geopolitics of AI Regulation

EU's Ambitious Move and the Global Power Play

Mar 11, 2024

Nicolas Naing

Key Takeaways:

  • Brussels Effect: The AI act has potential to extending beyond its borders to regions with limited regulatory capabilities, giving EU a strategic advantage.

  • Dual Nature: EU AI Act has a dual nature - as a tool of influence and as a subject of international geopolitical influence. Heavyweights like China and the US sway the EU's AI regulations, it undermines the Union's strategic influence on the global stage.

  • Divergent Approaches: So far, while the EU adopts a comprehensive centralized regulatory approach with the AI Act, the US opts for a decentralized approach, and China may enforce stricter regulations, especially in areas like recommender systems and AI content generation.

  • Support for EU AI Ecosystem: The EU began to invest its AI ecosystem through initiatives like the establishment of “AI Factories,” aimed at supporting startups and small to medium-sized enterprises (SMEs), which has various implications for firms.


In an era where technology and geopolitical influence intersects, the EU stands at the forefront of a significant endeavor to shape the future of AI regulation. With the introduction of the AI Act, the EU casts a wide net, extending its regulatory reach to continents far beyond its shores—Africa, Oceania, Latin America, and Asia—regions where regulatory frameworks may still be in their nascent stages. Yet, the true test of the EU's regulatory influence lies in its impact on the global AI sector, especially as it relates to superpowers like the United States and China. Each of these nations approaches AI regulation from distinct angles, setting the stage for a complex interplay of geopolitics, technology and global standards.

Big Powers Diverge

The EU has effectively spread its regulatory standards to regions with less political influence, such as Africa, Oceania, Latin America, and Asia, where regulatory capabilities are limited. Nonetheless, it’s crucial to examine how EU regulations might impact the global AI sector, particularly if the AI Act extends to leading nations like China and the US.

The US is taking on a decentralized approach with limited federal legislation, indicating an unlikely adoption of stricter AI regulations than the EU. However, if enough states implement similar regulations, it could indirectly influence federal policy.

On the other hand, China may enforce stricter AI regulations than the EU, as seen in its regulations on recommender systems and proposed regulations on AI content generation in 2022. While expectations suggest China may regulate its tech sector more rigorously than the EU, it is unlikely to curb government AI usage.  

Brussels Aims to Catch Up

In recent developments, the European Commission introduced an extensive array of initiatives designed to bolster startups and SMEs in cultivating reliable AI solutions that adhere to EU principles and regulations.

The establishment of “AI Factories” encompasses various measures, including facilitating privileged access to supercomputers for AI startups, establishing an AI Office, providing financial assistance, and advocating for the creation and implementation of Common European Data Spaces.

Furthermore, the European Commission aims to enhance institutional capabilities to ensure the ethical and secure utilization of AI, while also aiding EU public administrations in the integration of AI technologies. This comprehensive package underscores the Commission’s dedication to nurturing a flourishing AI landscape in Europe, all while prioritizing trust and ethical conduct.


The AI Act introduced by the EU is a pivotal move towards regulating the rapidly advancing technology of artificial intelligence (AI), aiming to address global concerns over AI governance. By enforcing these regulations, the EU not only addresses worldwide issues spurred by swift technological progress and the increasing complexity of international relations but also aims to extend its influence on the global stage. This legislation is notable for its broad reach, impacting businesses outside the EU by imposing specific obligations on them. This approach exemplifies the "Brussels effect," showcasing the EU's ability to single-handedly influence global market regulations, a strategy aimed at strengthening its position in the ever-changing domain of AI geopolitics.

The Act’s influence is already evident, as multinational corporations that market their products within the EU are beginning to adapt to these new requirements. These companies, although operating globally and not solely within the EU's jurisdiction, are keen on ensuring that these regulations do not place them at a competitive disadvantage. Consequently, this has led to a situation where not just the EU but also foreign governments and international entities are engaging in the development of these standards. This engagement is part of a broader trend, with countries like the US and China viewing the establishment of international standards as a strategic arena for technological competition.

Therefore, while the EU's AI Act is a significant step towards regulating AI on a global scale, the process of setting these standards has evolved into a geopolitical lobbying effort. It is influenced by international corporations, global standards bodies, and governments worldwide. This reflects a recent trend where countries like the US and China have increasingly engaged in strategic efforts to shape international standards, viewing it as a form of geopolitical competition in the technology sector.


  • Multinational Tech Firms: companies may potentially grapple with the Act’s complex regulations, necessitating adaptation for compliance and competitiveness. Non-compliance risks hefty fines, up to €35 million or 7% of annual turnover for banned AI applications, and €15 million or 3% for high-risk AI misuse. Meanwhile, startups and SMEs may benefit from the EU’s “AI Factories” initiative but face challenges in meeting regulatory demands, which may intensify administrative and operational burdens and potentially hinder innovation and market entry.

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