00:00Well, let's decode this a little more with Rob Nice, who's founding partner of H3 Capital, a London-based technology venture capital firm.
00:07Great to have you on the program.
00:09Look, this is all being presented as a technical adjustment, but it seems that the EU's flipped the script on AI.
00:17What's your take?
00:20I think they're wound up.
00:22I think a lot of this is very face-saving, that frankly, they're in a position where they don't have much negotiating power.
00:27They don't have the investment, they don't have the innovation, they don't have the technology.
00:31They're behind the curve in pretty much every way.
00:33So you can make a lot of noise and you control a good amount of population by number, but you don't really hold any of the bargaining chips.
00:39You're behind the eight ball with America and China and other larger economies.
00:42So it's a bit of putting lipstick on the pig, I guess.
00:45But I thought the EU wanted to be this global leader on AI regulations.
00:49So what has changed?
00:51Is it that tech has just been moving too fast?
00:53Yeah, I mean, everyone would love to be that.
00:57It's great to say you'd love to be the leader, but technology moves fast and you have to have the investment.
01:01If you really want to be a global leader, you have to fund it.
01:04And it's not going to come from domestic capital markets.
01:06It has to come from government investment, which is even harder.
01:09So you look at the ambitions, sure, they're very high, to create another Google, to create another open AI, but there's no real infrastructure to do that.
01:16It's years of underinvestment and under-focus on it.
01:19And then even when there is innovation, they tend to shoot themselves in the foot with over-regulation.
01:23You talked about putting lipstick on a pig, making it sound like it's all talk and no action.
01:28Do you worry that this pause in terms of the AI act that took so, so long to negotiate in the first place?
01:34Does it undermine regulation and the rule of law beyond AI?
01:37It's probably better the more delay there is, frankly.
01:41I mean, the less they can get in the way of themselves, the better it probably is to at least allow local champions to develop, national champions.
01:48We're still undercapitalized overall, but I think the less friction locally, the better.
01:52And with all these regulations, I can't see how they do anything but create a deterrent to doing things in Europe.
01:57So what you're saying is this is about balancing regulation with innovation,
02:01and you feel that that innovation is being stifled too much if we try and answer too many ethical questions.
02:07Yeah.
02:07Unfortunately, in a global world that's connected by the Internet, you can't really pick and choose.
02:12If you want to be highly regulated, then you're going to have fewer people coming to you and fewer people using your products.
02:17If you want to be more expansive and invest more, sure, you may have a global world-leading product.
02:22But you can't have it both ways.
02:23I think Europe's always struggled, on one hand, with wanting to regulate and do things their way,
02:28but without having the seat at the table to actually have the control to do so.
02:31So what you're saying is that there's a big investment gap when it comes to this space and Europe.
02:37But, you know, another way that the EU might be seen to be bending to pressure from tech companies, from other nations,
02:43is this Nexperia dispute that threatens to halt car production at sites around the world.
02:49Who's really come out on top there?
02:51I suppose China's come out the best.
02:55Now, I think the Dutch were in a difficult position, again, because on one hand,
02:59they were nationalizing a foreign asset, which they found to be troublesome,
03:03that was surely backed by America or surely heavily leaned on by the Americans for global security reasons.
03:08Then, on the other hand, you have German car manufacturers that need essential semiconductors from China,
03:13and you're at this deadlock where, unfortunately, the Dutch were the biggest losers, I'll say, if nothing else,
03:18that they get squeezed in the middle by these national and international entities that each wants a different side.
03:24So they've reached out to this Cold War era law, and it's created a lot of controversy.
03:29It's created this dispute.
03:31But what tools do EU countries have at their fingertips to strengthen their position
03:36when it comes to competition with China, with the United States?
03:40Well, this is the problem.
03:42It's the same with, you know, oil and gas in Europe as well, that the horses kind of left the barn,
03:46that these were all decisions made years ago.
03:48You know, interests were sold, control was sold to foreign parties, be it from other governments or wherever.
03:53And now you're trying to undo the mess that was created, you know, 10, 20 years ago.
03:57So, you know, you can look at things like ownership and restrictions around control.
04:01It just gets really, really messy now when you're years into a different ownership
04:05or years into trying to change ownership and or nationalize something.
04:08It was very difficult.
04:09There really isn't a whole lot they can do.
04:11They can start from first principles and try to go back and find, you know, areas the law has been broken,
04:15which was the case in Experian.
04:17They found that, you know, the CEO is acting illegally.
04:21But those are hard to prove more so than stopping it in the first place.
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