EU watchdog: Europe trails US, China in AI race

(CN) — The European Union is falling behind the United States and China in the race to develop artificial intelligence, the bloc’s auditors said Wednesday in a report.

The European Court of Auditors found numerous failings and shortcomings by the European Commission, the bloc’s executive branch, to carry out ambitious plans to make Europe an AI leader.

“The EU has so far had little success in developing Europe’s artificial intelligence ecosystem, and has failed to accelerate AI investment on a par with global leaders,” the watchdog agency said.

The report comes amid growing anxiety in Europe over the bloc’s sluggish economies and calls for a push to boost industrial output by streamlining bureaucracy and backing away from the EU’s ambitious Green Deal agenda.

Wednesday’s audit shined an unfavorable light on an area where the EU hoped to establish itself as a world leader in the exploding realm of AI, which many economists believe will be a major driver for economic growth in the coming years.

The audit adds to fears that European companies will not be able to compete with the U.S. and China in the markets of the future, such as robotics, big data, neuroscience, cloud computing, high-performance computing and photonics.

Indeed, the report left the impression that the EU may become a laggard in the rapidly growing fields of AI just as Europe failed to foster companies capable of rivaling the American and Chinese giants that came to dominate Big Tech.

“Sizable and focused AI investment is a game-changer in setting the speed of EU economic growth in the years to come,” said Mihails Kozlovs, the lead auditor, in a statement.

“In the AI race, there is a risk that the winner takes it all,” he said. “If the EU wishes to succeed in its ambition, the European Commission and the member states must join forces more effectively, pick up the pace, and unlock the EU’s potential to succeed in this ongoing major technological revolution.”

Last December, the EU drew praise and criticism for passing the world’s first rules to regulate AI. The idea was to make the EU a standard-setter for AI ethics, but business leaders warned the regulations would stifle innovation while civil rights groups said they law did not go far enough to protect privacy.

In its report, the Court of Auditors faulted the European Commission for not carrying out plans established in 2018 to make the EU an AI leader.

With the EU falling behind the U.S. and China in venture capital investments, Brussels sought to make up the difference by pooling investments and resources across its 27 member states.

But the auditors said “the framework for coordinating and regulating EU investment in AI is still a work in progress.”

Between 2018 and 2020, the gap in overall investment into AI between the U.S. and the EU more than doubled with the EU trailing by more than $10.8 billion, the audit found.

Analyzing data from 2021, the auditors noted that Europe and Central Asia made only 4% of AI patent filings worldwide, far behind North America (17%) as well as the East Asia and Pacific region, which accounted for 62% of patents.

The audit also found that the EU’s AI plans “have so far triggered only modest EU capital support (such as equity financing) for innovators.”

It noted that EU efforts to merge all 27 EU nations into “a single market for data are still at the inception phase, and cannot immediately boost AI investment.”

Setting up such a market “would allow data to flow freely within the EU and across sectors for the benefit of businesses, researchers and public administrations,” the audit said.

The EU has strict rules on data privacy, a condition that hampers the ability of data sharing and collection by companies and AI researchers.

At the national level, the audit found four EU nations — Bulgaria, Croatia, Greece and Romania — had failed to develop AI strategies by the middle of 2023, four years after an EU-wide deadline. It also noted that many EU states had failed to set targets on AI spending, as called for under an EU plan.

The commission, though, came in for the most criticism. Among several failings, auditors found it had not carried out annual reviews of its AI plans.

On Wednesday, the commission said it had worked with the auditors on the report and taken steps to improve its oversight.

It also announced the opening of a new office dedicated to enforcing the AI Act and spearheading the bloc’s efforts to foster AI.

The AI Office will “ensure that AI general-purpose models made in Europe and trained through EU supercomputers are fine-tuned and integrated into novel applications across the economy, stimulating investment,” the commission said.

The commission added that it has made Europe’s supercomputers available to European AI start-ups that want to train their AI models, a move meant to encourage AI research.

In January, the commission announced a new $4.3 billion package for investments in generative AI. This comes on top of $1.08 billion a year in EU-funded AI research projects. The EU hopes to attract more than $21 billion a year in investments in AI.

By comparison, the U.S. spent $3.3 billion on AI research in 2022, the audit said. It did not say how much China spends on AI; Beijing reportedly keeps information on its state funding for AI largely confidential.

Courthouse News reporter Cain Burdeau is based in the European Union.

Follow @cainburdeau