After DeepSeek, America and the EU are getting AI wrong

Both Europe and America should rethink their approach. After the work by DeepSeek, China’s hotshot model-maker, Europe has been given an unexpected chance to catch up—if it can cast off its regulatory straitjacket. America can no longer behave as if it has a monopoly on ai. It should change how it wields power over its allies.

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The pace of innovation is astonishing. Barely six months ago AI looked as if it needed a technological breakthrough to become widely affordable. Since then reasoning and efficiency techniques have emerged, enabling DeepSeek to develop models close to the frontier even though it cannot use cutting-edge American chips. And DeepSeek is just exhibit A. Researchers everywhere are racing to make ai more efficient. Those at Stanford and the University of Washington, for instance, have trained models more cheaply still. Once there were concerns that the world did not contain enough data to train advanced systems. Now the use of synthetic data seems to be producing impressive results.

For Europe, which looked hopelessly behind in AI, this is a golden opportunity. In contrast to Google’s search engines, where network effects mean that a winner takes all, no law of computing or economics will stop European firms from catching up. Closing the gap is therefore a matter of policy. Mr Macron is rightly encouraging investment in data centres. But just as important is cutting through the red tape that prevents companies from innovating and adopting ai. The EU’s ai Act is fearsomely stringent: a startup offering an ai tutoring service, by one account, must set up risk-management systems, conduct an impact assessment and undergo an inspection, in addition to jumping through other hoops.

Another hurdle is privacy rules. Even big tech firms, with their huge compliance teams, now launch their ai products in Europe with a delay. Imagine the costs for startups. German manufacturers sit on a wealth of proprietary data that could help create productivity-enhancing ai tools. But the fear of falling foul of regulations puts them off. A wise relaxation of the rules, as well as harmonised enforcement, would help Europe exploit AI’s potential.

America needs to wake up, too. China’s advances suggest that Uncle Sam has less monopoly power over ai simply by having a hold over cutting-edge chips. Instead, it needs to attract the world’s best talent, however distasteful that may be to maga Republicans.

America should also change how it engages with its allies. In Paris Mr Vance rightly warned against the use of Chinese infrastructure (and the fact that China signed the summit’s declaration on ai governance may explain why America declined to). But America would more successfully discourage the adoption of Chinese AI if it were more willing for its friends to use its technology. In his final days in office Joe Biden proposed strict ai controls that would hinder exports even to allies like India. Revising those would encourage countries to use American tech rather than pushing them into China’s embrace. American ai now faces competition. If it wants to reign supreme, Uncle Sam will have to entice, not threaten.