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In the realm of technology, the European Union is easing restrictions on artificial intelligence, while the United States has made more progress. The AI bubble remains intact, bolstered by Nvidia’s staggering quarterly profits, although worries continue. Additionally, Meta has managed to avoid disbanding for reasons analogous to those of Google.

Rollback of Regulations

The billions invested in AI far exceed Europe’s commitment to digital privacy and rigorous tech regulation. The EU’s AI legislation and General Data Protection Regulation (GDPR) have both faced delays and weakenings. Former Italian Prime Minister Mario Draghi had previously alerted that Europe was trailing behind the United States and China regarding innovation in critical technologies like AI. This sentiment was echoed by other stakeholders, including the EU’s Economic Commissioner.

My colleague Jennifer Rankin reported on Brussels’ pursuit for growth:

This initiative is part of the commission’s “digital omnibus” aimed at simplifying technical regulations, encompassing the GDPR, the AI Act, the ePrivacy Directive, and the Data Act.

Proposed modifications to the GDPR would facilitate tech firms in utilizing personal data for training AI models without needing consent. Furthermore, it aims to mitigate “cookie banner fatigue” by restricting how often users must consent to online tracking.

The committee also confirmed plans to postpone the implementation of key components of the AI Act, scheduled to be enforced in August 2024 and not yet fully applicable to enterprises.

Read more: European Commission faces ‘major setbacks’ in digital protection

Meanwhile, the United States is intensifying efforts to uphold its position in the AI sector by attempting to lift restrictions on the industry’s future expansion. Legislators have included provisions in the annual National Defense Authorization Act directing the federal government to obstruct state-level AI regulations. AI in the U.S. is less regulated compared to Europe or China, but this may soon change. Proposals within the NDAA could also prevent DJI, the leading Chinese drone manufacturer, from launching new products in America.

Last week, Donald Trump introduced a similar executive order, and earlier this year, Congressional Republicans suggested a 10-year halt on state regulations governing AI, which was overwhelmingly opposed with a 99-1 vote in the Senate. Future amendments may face similar resistance. Over 200 state legislative representatives and senators attended on Monday, and published a letter opposing the measure (pdf).

Under the proposed regulation, the Justice Department would take legal action against states trying to restrict AI, particularly targeting California and Colorado. If passed, the U.S. would advance further in regulating emerging technologies, refraining from imposing nationwide constraints on the companies that develop them while punishing state laws attempting to do so. Critics contend such actions could allow the risks associated with AI to proliferate unchecked and infringe on national sovereignty. Proponents from Silicon Valley argue that reducing legal impediments accelerates growth and profits, benefiting both the industry and the nation.

President Trump’s assertion of needing to simplify AI regulation in the U.S. has drawn skepticism. “It can’t go through 50 states. You need one standard. Fifty is chaos. Just one state can trigger a domino effect,” he stated during last week’s US-Saudi Investment Forum. “There will be some Waystars, but they resist this. They want to end AI.”

Which Technologies to Invest In

A Week in AI

Bubble Burst? Not Yet, Claims Nvidia

Nvidia released its quarterly results last week, showcasing strong performance, reflecting several consecutive years of impressive profits. The headline in August read: “NVIDIA Sets New Sales Record Amid Concerns of AI Bubble and Trump’s Trade War.” Fresh updates announced: “‘We excel at every AI stage’: NVIDIA CEO assuages Wall Street’s anxieties about an AI bubble amid market downturns.”

My colleague Johana Bhuiyan reported on the findings:

The company has outperformed Wall Street expectations across several metrics consecutively, demonstrating that the substantial economic AI boom shows no signs of slowing down. Nvidia posted diluted earnings per share of $1.30 on total revenue of $57.01 billion, exceeding investor anticipations of $1.26 per share with revenues of $54.9 billion. Year-over-year sales surged 62%. Data center sales reached $51.2 billion, outpacing the expected $49 billion. The company also predicts sales for the fourth quarter to be around $65 billion, while analysts anticipated $61 billion.

CEO Jensen Huang remarked, “There’s considerable talk regarding an AI bubble. From our perspective, it appears quite different. For clarity, Nvidia’s trajectory is distinct from other accelerators. We thrive at every phase of AI, from pre-training to post-training to inference.”

Stock prices globally surged due to Nvidia’s impact, and markets celebrated. The chip manufacturer’s success is robust; however, apprehensions about an impending decline linger. Despite a strong financial report, Nvidia’s stock dipped the following day. My colleague Callum Jones covered market fluctuations as follows:

Major U.S. stock indexes saw declines less than 24 hours after Nvidia’s impressive results initially propelled gains.

Wall Street experienced a surge when Nvidia, the largest publicly traded company, assured investors of a strong demand for its advanced data center chips. However, this relief diminished, with technology stocks central to the AI boom facing pressure.

In New York, the benchmark S&P 500 index closed down 1.6%, while the Dow Jones Industrial Average fell by 0.8%. The tech-heavy Nasdaq Composite Index ended 2.2% lower.

“Watching semiconductor companies selling to power AI doesn’t alleviate concerns that some of these hyperscalers may be overspending on AI infrastructure,” stated Robert Pavlik, senior portfolio manager at Dakota Wealth. “Your enterprise might benefit from it, but other firms are still heavily investing.”

Recently, Meta lost a significant antitrust case filed by the U.S. government. The reasoning for the victory aligns with the rationale expressed by judges in another tech giant monopoly case, the United States v. Google. Both judges indicated that the technology sector had dramatically evolved since the inception of the case.

In recent years, notable competition has emerged in the tech sector, particularly in search and social media, challenging both Google and Meta. For Google, rival competitors include ChatGPT and broader generative AI. The tech titan has admitted that it faces an existential competition with smaller adversary OpenAI. In 2022, Google executives referred to ChatGPT as a “code red” for the search business. However, this David may not be equipped to overpower Goliath. Sam Altman noted that advancements in Google’s AI could present “temporary economic headwinds” and create a “challenging environment” for the company.

Meta’s competing force is TikTok. Mark Zuckerberg has used similar terms as Pichai, describing the rapid rise of apps as a “very urgent” threat to his social media platform. Shortly thereafter, Meta launched Reels, a short-form video feed on Instagram.

Judge James Boasberg pointed to the surge of popular Chinese social media platforms as evidence of increased competition in the social networking space. “The landscape that existed just five years ago when the Federal Trade Commission filed this antitrust case has changed dramatically.” He criticized the FTC for not considering YouTube as a relevant competitor. “Even excluding YouTube, the entry of TikTok alone could nullify the FTC’s lawsuit,” he opined.

Judge Boasberg determined that new competition would not compel Meta to divest Instagram, acquired in 2012 for only $1 billion, or WhatsApp, purchased in 2014 for $19 billion.

Read more: Meta prevails in significant U.S. antitrust case, removing the necessity to divest WhatsApp and Instagram

In September, the U.S. judge overseeing the U.S. v. Google case issued an opinion akin to Boasberg’s, with the exception being Google’s loss. The government had charged tech giants with unlawfully monopolizing the online search domain. According to the University of Pennsylvania, Google commands roughly 90% of the global search market. Wharton Business School. Google.com is the leading website globally. The judge concurred with the government’s stance but disagreed that the solution required Google to sell Chrome.

Google will not be compelled to divest Chrome, the world’s leading web browser, likely valued more than Instagram and WhatsApp combined. The judge acknowledged that generative AI has transformed the market forever, introducing types of competition that Google hasn’t encountered in decades. Companies such as OpenAI are positioned more favorably compared to any earlier challengers against Google.

Read more: How Google evaded a major breakup – and why OpenAI is grateful for it

The Broader TechScape