AI Regulation or AI Requiem? Part 3
Europe’s Complete Capitulation: Trading Steel for Silicon Dreams
In the span of 48 hours, Europe’s AI delusion has gone from tragedy to farce, and the mask has finally slipped.
Christine Lagarde, President of the European Central Bank, just stood at a podium in Bratislava and delivered what amounts to a surrender speech. “We’ve already missed the opportunity to be a first mover in AI,” she admitted. The woman who controls Europe’s monetary policy is now desperately pleading for the continent to “remove all the obstacles” that prevent AI adoption, warning we risk “letting the wave of AI adoption pass us by.”
Too late, Christine. The wave didn’t pass Europe by: its technocrats deliberately built a seawall of regulations to stop it.
The ECB’s Panic Attack
Reading Lagarde’s speech is like watching someone realize their house is on fire after spending years dismantling the fire department. She cites Demis Hassabis saying AI will be “ten times bigger than the Industrial Revolution and maybe ten times faster.” She acknowledges Europe bears the costs of being “slow adopters during the last digital revolution.” She even admits we “cannot afford to make the same mistake again.”
But here’s the kicker: her solution is to become a “strong second mover” by focusing on “rapid adoption and smart use of existing AI technologies.” Translation: we’ve given up on building anything meaningful; now we’re just hoping to be good customers for American and Chinese AI.
The speech is full of desperate rationalizations. Europe’s economy is “highly diversified”! We have “industrial-scale data spaces”! We can leverage our “universal healthcare systems”!
Right.
The Ultimate Humiliation: Steel for Silence
But if Lagarde’s speech was the white flag, what came next was the terms of surrender.
The Trump administration just delivered its ultimatum to Brussels: soften your digital regulations on American tech companies, and we’ll think about reducing tariffs on your steel and aluminum. Let that sink in. The United States is offering to trade 19th-century industrial commodities for 21st-century digital dominance. And Europe is actually considering it.
Commerce Secretary Howard Lutnick didn’t even try to hide the contempt. He told EU ministers that “balanced rules could draw a trillion dollars of investment to the EU”. The message is clear: your Digital Markets Act and Digital Services Act are obstacles to American tech hegemony. Remove them, and we’ll let you sell us some metal.
The timing is exquisite. Just five days earlier, the EU General Court upheld the Digital Services Act against Amazon’s legal challenge, dismissing arguments that the regulation violated fundamental rights like “freedom to conduct a business.” The court ruled that obligations on very large platforms are justified to prevent “systemic risks to society.” Brussels spent years defending these rules in court and won. Now they’re being asked to hand them over for scrap metal prices.
This is what Europe has been reduced to: begging for steel tariff relief by promising to be nicer to the companies that are eating your lunch. It’s like negotiating with your colonizer about the terms of your colonization.
Meanwhile, in the Real World: Opus 4.5
While Europe debates whether to trade regulatory sovereignty for metal tariffs, Anthropic just dropped Claude Opus 4.5.
The timing couldn’t be more symbolic. The model scored higher than any human candidate on Anthropic’s internal engineering assessment, the same test they give to prospective performance engineers. According to Anthropic, it’s “the best model in the world for coding, agents, and computer use,” although Google’s Gemini 3 would like a word. They’re pricing it at $5 per million input tokens and $25 per million output tokens, a dramatic reduction from the $15 and $75 rates for its predecessor, making Frontier AI more accessible than ever.
This is American AI innovation in action: better performance, lower prices, relentless progress. Anthropic recently got multi-billion-dollar investments from Microsoft and Nvidia, boosting its valuation to about $350 billion. That’s more than the GDP of Finland.
Google’s Gemini 3 is making waves too, so much so that Salesforce CEO Marc Benioff is ditching ChatGPT for it. OpenAI’s Sam Altman is reportedly spooked about “temporary economic headwinds” from Google’s progress.
Notice what’s happening here? American companies are competing viciously with each other to build the future. European companies are competing for who gets to be their best customer.
The Three-Act Tragedy
Act I: Denial - “We’ll regulate AI into submission and call it safety!”
Act II: Bargaining - “Maybe if we delay the regulations by a year and soften the requirements...”
Act III: Capitulation - “Please sir, may we have some steel tariff relief? We’ll be good, we promise!”
We’re now firmly in Act III. The ECB President is openly admitting defeat. The Commission is negotiating away digital sovereignty for metal commodities. And the best Europe can hope for is to be a “strong second mover”, corporate speak for “perpetual customer.”
The Bitter Truth
Here’s what European leaders still don’t understand: you can’t regulate your way to technological leadership. You can’t committee your way to innovation. And you definitely can’t negotiate your way out of irrelevance by trading away what little leverage you have left.
Every week that Europe spends debating regulatory frameworks, discussing data spaces, or negotiating steel tariffs is a week where the rest of the world is shipping killer models.
Lagarde warns about “letting the wave of AI adoption pass us by.” Christine, the wave hasn’t passed you by: you’re on the beach arguing about the proper regulatory framework for surfboards while everyone else is already riding.
The Final Insult
The most pathetic part? Europe is now hoping Trump—TRUMP!—will be merciful in trade negotiations. The same leaders who spent four years calling him a threat to democracy are now genuflecting for tariff relief, offering to neuter their own tech regulations in exchange for the privilege of selling Americans some steel.
This is what the grand European project has come to: trading digital sovereignty for industrial scraps, begging for mercy from the very tech giants you claimed to regulate, and hoping to be good enough customers that someone might throw you a bone.
The ECB President says AI could be “ten times bigger than the Industrial Revolution.” She’s right. And Europe is positioning itself to miss it ten times harder than it missed the internet revolution.
Wake me when Europe announces it’s abolishing the EU AI Act, firing everyone at the Commission, and putting its entire GDP into building state-of-the-art AI. Until then, this is just watching a continent negotiate the terms of its own obsolescence.
The future is being built. Europe is haggling over scrap metal prices.
VAE VICTIS.