How Brussels put millions of iPhone users in the slow lane

A web of new digital rules threatens to cut Europe off from the latest innovations in tech

As he unveils the new iPhone 16 to millions of Apple fans on Monday, Tim Cook is expected to stress one feature above everything else.
Apple’s latest device will harness the power of artificial intelligence – giving users willing to part with close to a thousand pounds access to powerful digital assistants and voice controls meant to make life easier and more productive.
At least, that is what consumers in the US can hope for.
Unfortunately for Cook, Apple’s boss, European customers will be forced to wait until at least 2025 amid a regulatory battle with Brussels.
The European Union has long sought to tame America’s tech giants and make them bend to the bloc’s diktats. By and large, Silicon Valley businesses have paid their fines or tweaked their products to suit the whims of MEPs and the European Commission.
But now, US tech giants are threatening to cut Europe off from their latest innovations, blaming its new digital rules which they say threaten innovation and users’ security. Apple’s AI features – which will be available in the UK – are the latest casualty of that war.
“The danger now is we move quickly towards a two speed Western global economy,” says Louis Mosley, executive president of UK and Europe at US software giant Palantir.
“The EU risks putting itself firmly in the slow lane.”
Technology companies already spend hundreds of millions of pounds on compliance and legal advice. But an industry source says the EU’s new rules even have these battle-scarred advisers complaining, “‘Holy s— – this is a lot to deal with.’”
Wonkish debates over regulation are normally fought in the corridors of power in Brussels, but the latest split is having an immediate impact on consumers and the tech giants.
Dan Ives, an analyst at Wedbush Securities, said the lack of new AI products on Apple’s EU iPhones could delay around 10m phone sales to 2025, a significant dent in its revenues.
Apple has claimed the EU rules could “compromise the integrity of our products in ways that risk user privacy and data security”.
In response to questions about Apple’s decision, a European Commission spokesman said: “The EU is an attractive market of 450m potential users and has always been open for business for any company that wants to provide services in the European internal market.
“All companies are welcome to offer their services in Europe, provided that they comply with EU legislation.”
It is not just Apple that is withholding the latest AI mod cons from Europe.
In June, Meta said it would not be launching its new Meta AI assistant in Europe after Ireland’s data regulator objected to the Facebook owner using European’s personal data – including billions of historical posts – to fine-tune its chatbot service.
Stefano Fratta, an executive at Meta, said Europe was at a “crossroads”, with Europeans likely to miss out thanks to “activists … advocating extreme approaches to data and AI”.
Google, meanwhile, has repeatedly delayed new updates to its Gemini digital assistant, meaning that European customers get the latest updates months after the US.
The tech giants blame a web of new digital rules – the Digital Services Act, Digital Markets Act and the AI Act – for complicating the process of launching new products and slowing innovation.
The bloc has wasted no time enforcing the strictures, launching compliance investigations into companies including Apple, Google, Meta, X and TikTok.
For years, the internet giants have largely had to make do without operating in China or else severely limit their services in order to remain in the market. Apple, for instance, bows to demands of Chinese censors to block WhatsApp.
In other markets such as India and Indonesia, tech giants have clashed with officials over censorship but largely remained operational.
Now, there are concerns that Europe is emerging as a new front.
“The big companies see it as really political,” an industry source says. “They see it as protectionism by stealth.”
For instance, Thierry Breton, the European digital tsar, has repeatedly and publicly attacked X, formerly Twitter. He sent a letter to billionaire owner Elon Musk last month – apparently without the approval of other European Commission leaders – warning about the “amplification of content that promotes hatred, disorder, incitement to violence or certain instances of disinformation”, hours before Mr Musk was due to host a livestream with Donald Trump.
Mr Musk responded: “POV: It’s 2030 in Europe and you’re being executed for liking a meme.”
Industry insiders add there is frustration that Europe is increasingly an outlier on AI rules. While previous European tech rules have been gradually adopted around the world – such as privacy protections similar to the bloc’s GDPR – it is not clear that the rest of the West will follow it on AI.
Already, the UK has pushed back introducing an AI Act, and any final laws are likely to be heavily targeted.
Daniel Friedlaender, the European head of tech lobby group the CCIA, adds that the “huge volume of EU tech and digital rules” has left tech companies facing “inconsistent, and sometimes outright conflicting, demands from regulators every day”.
Apple, for example, has argued interoperability and data sharing requirements in the Digital Markets Act – Europe’s competition rules – could conflict with its privacy requirements.
However, bosses at smaller technology companies have welcomed the EU’s rules, which they believe will finally break the dominance of a handful of US players.
Andy Yen, the chief executive of private email app Proton, says the concerns of tech giants were “just spin to hide big tech’s real objections”.
“It’s not about security, but instead about finding ways to avoid playing fair,” he says.
Alexander Duisberg, a partner at the law firm Ashurst based in Germany, argues that the EU’s approach to tech is “not too different to other industries which are heavily regulated”, adding the rules largely contain “common sense requirements”.
Legal experts add that while Europe may be a regulatory battleground today, in time the bloc’s rules on digital competition could be widely imitated.
With GDPR, other countries ultimately brought in similar data laws while the tech giants broadly adopted the measures as a global standard.
Industry insiders do not agree. One source says the European AI Act in particular is viewed as a specifically European issue, with other jurisdictions regarding the technology as too strategically important to bury in regulation just yet.
The broad scope of that act means any business that buys or installs an AI system such as a chatbot could be in scope, not just tech giants. This could leave them risking fines equal to 7pc of their turnover.
“There is no doubt that if EU regulation starts to become prohibitive you will see the top AI companies in Europe and the top AI talent quickly move to the US,” says Tommy Stadlen, founder of venture investment firm Giant Ventures.
However, the EU’s crackdown could be an opportunity for Britain. While the UK has clashed with big tech firms over mergers and competition, it has so far held fire on an all-out crackdown on AI deals or data gathering.
Labour had been widely expected to announce plans for an AI Act during the King’s Speech, but dropped the announcement at the last minute.
Under Matt Clifford, Rishi Sunak’s former AI adviser, Sir Keir Starmer’s Government is now thrashing out an “AI Action Plan”, a decision that has been viewed positively by the industry.
Neil Ross, associate director of policy at the trade group techUK, says: “The UK approach to AI regulation is iterative … businesses are generally optimistic about the direction of travel.”
Mosley, of Palantir, adds: “The UK has important choices to make – with encouraging signs that it will get them right.”
Last week, there were signs of a rapprochement, as the EU, the UK and the US signed up a new “legally binding” AI convention, which made the nations accountable for the harmful effects of the technology – although without any fines or firm penalties.
Peter Kyle, the Technology Secretary, told the Financial Times the measures could provide a “baseline” for future rules, warning that tech giants were “refusing” to roll out new products in the EU.
Yet it may be too late.
“Europe probably just can’t have the American internet anymore,” wrote Sam Lessin, a partner at Slow Ventures and a former Facebook executive, on Threads. “At some point, the tech companies will just say that Europe isn’t worth it.”