The bad news: Europe, as was the case with the birth of the Internet, has not pioneered the AI boom that was called upon to change the course of the global economy. Good news: European companies are adopting generative AI on a scale similar to that in the United States. On Monday, European Central Bank President Christine Lagarde spoke about the emergence of this new technology in Bratislava (Slovakia), at an event organized by the Organization for Economic Cooperation and Development. His message to European leaders could not be clearer: Overzealous regulation “would slow the spread of artificial intelligence and thus hinder the prosperity of all Europeans in the coming decades.”
For years, if not decades, the EU has been talked about as a bureaucratic giant, very capable of enforcing regulations like mandating plastic bottles with caps, or approving strong data protection laws that are a benchmark across the world, but ineffective when it comes to generating an entrepreneurial ecosystem.
For this reason, Lagarde fears that the desire to contain the risks of AI expansion (they exist, and they are not simple, according to experts), will create obstacles to innovation. “We must remove all obstacles that prevent us from embracing this transformation,” he warns. “Otherwise, we risk letting the wave of AI adoption pass us by and putting Europe’s future at risk.”
French women’s faith in the impact of coming change is firm. Compare artificial intelligence to the advent of electricity, computers, or the Internet. He sees similarities with them in the path that artificial intelligence can follow, which he considers not immediate, but irreversible. “Disruption came early, and large-scale productivity gains only emerged slowly. For example, it took about thirty years before the impact of electricity became evident throughout the economy. Electricity grids had to be built, factories redesigned, and workers reassigned from old to new tasks. Computers also required long-term investments in Devices, programmingskills and new business models before they are translated into measurable improvements.
Lagarde is convinced that artificial intelligence will bring a significant improvement in productivity, which, if it were similar to electricity, would be 1.3 points per year, and if it were like the Internet explosion, it would increase by 0.8 points. Rather, it puts this innovation above its predecessors in terms of the speed with which it can become effective. He expects that “there are reasons to believe that artificial intelligence can spread more quickly and achieve tangible economic gains sooner than in previous technological waves.”
To support his thesis, he turns to the omen of the Nobel Prize in Chemistry Demis Hassabis. “It will be ten times greater than the Industrial Revolution, and perhaps ten times faster.” It is believed that the system is not ready. “The question is no longer whether these new frontiers will be reached, but when, and the pace of progress in recent years suggests that it is likely to be closer than our institutions and systems are preparing for.”
In a world where the five largest companies by market value are five American technology companies (Nvidia, Apple, Alphabet, Microsoft, and Amazon), and where China has already shown its teeth with amazing developments such as DeepSeek, which is able to compete head-to-head with ChatGPT at a much lower price, Lagarde assumes that the battle for leadership has been lost, and fears that the scenario of the Internet and smartphone revolution will be repeated. “We are still bearing the cost of slow adoption of this technology during the recent digital revolution. We cannot afford to make the same mistake.”
But the speech did not want to be in any way an assumption of defeat. Lagarde estimates that with rapid adoption, “Europe can turn a late start into a competitive advantage.” Because as is the case with the transportation network, where it does not matter who is the first to build it as much as its extension, in the world of artificial intelligence, it is not the first to arrive who wins, but the one who implements it in a general way. “European companies are already adopting generative AI on a scale similar to that in the United States. What the ECB is hearing from major European companies confirms this trend: many of them are investing heavily in data centers, cloud solutions and AI.”
bubble?
The risk of a bubble in these assets passed very briefly due to Lagarde’s intervention. “Some see their growth as temporary activity outpacing underlying fundamentals. But a discussion framed only in short-term ups and downs can miss the bigger picture.”
In any case, the risk of a stock market explosion emerging in Europe is much lower, because while the top 10 US companies by market capitalization represent 40% of the market and are part of only four sectors, the top 10 companies in the European Union add up to 18% in almost twice as many sectors. It’s the silver lining, or perhaps just a weak consolation, in the face of the fact that big European companies are far from popular with American technology companies among investors.