1. ✂️ EU START-UPS: BURIED IN RED TAPE

Europe’s start‑ups are being forced to pump the brakes on innovation. According to a New York Times report, “Europe is still fighting for its footing in the global start-up race.” Why? Because the EU’s red tape and “cumbersome bureaucracy” are bogging down startups looking to expand beyond their own borders.

Rules pile up fast, and there are a lot of rules in the EU.

General Data Protection Regulation (GDPR) privacy checks, Digital Services Act (DSA) content reviews, and Digital Markets Act (DMA) obligations mean more audits and lawyers before features can ship. As if these regulations aren’t overbearing enough, different countries read the rules differently, which adds even more forms.

RED TAPE COSTS EUROPE TRILLIONS: A McKinsey report also found that Brussels’ excessive regulatory agenda could cost the European Union 2 trillion to 4 trillion euros by 2040, “more than its planned spending on health, defense and the green transition together,” the New York Times reports.

Until the EU cuts the red tape, European entrepreneurs will fall behind the rest of the world.

2.🇯🇵 JAPAN SETS EXAMPLE FOR EU

This week in Tokyo, the United States and Japan established a smarter standard for digital policy that promotes competition without gutting user safety or trampling IP.

As a part of this commitment, Japan will implement its Mobile Software Competition Act in a non-discriminatory manner, which balances fair & free trade with user safety & convenience and respects intellectual property rights, as characterized by the White House.

This framework manages to thread the needle between competition and security, and demonstrates that there is a better, more balanced way forward in regulating digital policy.

As Europe and the U.S. continue to clash over these regulations themselves, Brussels would be wise to take a page out of Japan’s playbook.

The DMA’s heavy-handed mandates have slowed rollouts, weakened safeguards, and degraded EU-US relations, but it’s not too late for Europe to reverse course.

If Brussels truly wants growth, it should follow Tokyo’s lead and pursue policies that promote innovation and keep users safe & secure, not double down on punitive ones.

🪫 BRUSSELS REGULATES, 🔋 AMERICA INNOVATES

As we’ve long called attention to, Brussels is strangling its own tech sector with a maze of overlapping rules, then pointing the finger at U.S. platforms to explain Europe’s innovation deficit.

In a new article from AEI’s Center for Technology, Science, and Energy, Mark Jamison writes, “the global leaderboard in technology tells a clear story: Innovation thrives in the United States, not Europe.”

WHAT DOES THIS MEAN FOR AI? Just like how the EU suffocates small businesses with overregulation, Brussels continues to enact legislation that strangles the tech and AI space as well through the DSA and GDPR. According to the Association of German Banks, “Europe is a global pioneer in regulating AI. Meanwhile, other regions are world leaders in the development and profitable application of AI.”

Europe is becoming a world leader in regulating AI while others lead in building and monetizing it. That posture doesn’t “level the playing field”; it scares off investment, incentivizes legal risk‑management over product building, and leaves European consumers with fewer features and slower rollouts.

But Brussels isn’t just regulating Europe; it’s now exporting rules via extraterritorial reach that hit American workers, startups, and users. The United States is resisting EU overreach that targets U.S. firms, and the Trump Administration is rightly pushing back against the EU’s overreach.