Bad news: Europe, as was the case with the birth of the Internet, has not been a pioneer in the artificial intelligence boom called to turn around the global economy. Good news: European companies are adopting generative AI on a similar scale to those in the United States. The president of the European Central Bank, Christine Lagarde, spoke this Monday about the rise of this new technology in Bratislava (Slovakia), at an event organized by the OECD. And his message to European leaders could not be clearer: too much zeal in regulation “would slow down the spread of AI and therefore set back the prosperity of all Europeans in the coming decades.”
For years, if not decades, we have been talking about the EU, very capable of imposing regulations such as the one that requires plastic bottles to have caps attached, or of approving powerful data protection laws that are a reference throughout the world, but ineffective when it comes to generating an ecosystem favorable to entrepreneurship.
For this reason, Lagarde fears that the desire to contain the dangers of the expansion of AI (), will lead to obstacles to innovation. “We must remove all obstacles that prevent us from embracing this transformation. Otherwise, we risk letting the wave of AI adoption pass us by and endangering Europe’s future,” he warns.
The Frenchwoman’s faith in the impact of the change to come is firm. Compare AI, computers or the internet. And he sees parallels with them in the trajectory that AI can follow, which he does not perceive as immediate, but irrevocable. “Disruption came early, and widespread productivity gains emerged only slowly. For example, it took about thirty years before the impact of electricity became clear throughout the economy. Power grids had to be built, factories had to be redesigned, and workers had to be reassigned from old to new tasks. Computers also required long-term investments in hardware, softwareskills and new business models before they were translated into measurable improvements,” he recalls.
Lagarde is convinced that AI will bring a significant improvement in productivity, which if it were similar to that of electricity it would be 1.3 points each year, and if it were more similar to the explosion of the internet it would increase it by 0.8 points. And it even places this innovation above its predecessors in the speed at which it can take effect. “There are reasons to believe that AI could spread more quickly and generate tangible economic gains sooner than previous technological waves,” he predicts.
To support his thesis, he turns to . “It will be ten times greater than the Industrial Revolution, and perhaps ten times faster.” And he believes that the system is not ready. “The question is no longer if this new frontier will arrive, but when, and the pace of progress in recent years suggests it is likely to be sooner than our institutions and regulations are prepared for.”
In a world where the five largest companies by stock market value are five American technology companies (Nvidia, Apple, Alphabet, Microsoft and Amazon), and in which China has already shown its teeth with surprising evolutions at a much lower price, Lagarde assumes that the battle to be pioneers is lost, and fears that the script of the internet and smartphone revolution will be repeated. “We still bear the cost of being slow to adopt during the last digital revolution. We cannot afford to make the same mistake.”
The speech, however, did not want to be, by any means, the assumption of defeat. Lagarde estimates that with rapid adoption, “Europe can turn a late start into a competitive advantage.” Because just as with a transportation network, in which it does not matter as much who is the first to build it as its extension, in the universe of AI it is not the first to arrive who wins, but rather whoever implements it in a generalized way. “And European companies are already adopting generative AI on a scale similar to that in the United States. What the ECB is hearing from large European firms confirms this trend: many 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 its growth as a temporary exuberance that outpaces underlying fundamentals. But a debate framed solely in terms of short-term ups and downs can miss the bigger picture.”
In any case, because while the ten main US companies by stock market value represent 40% of the market and are part of only four sectors, the ten largest in the EU account for 18% in almost twice as many sectors. It is the positive part, or perhaps only a weak consolation, in the face of the reality that the large European companies are very far from the American ones in the technology that is fashionable among investors.
