European lawmakers are poised to loosen some of the world’s strictest artificial intelligence (AI) regulations, just a year after hailing their AI Act as a global benchmark. The move comes amid mounting pressure from tech giants, investors, and the U.S. government, all warning that Europe’s regulatory zeal risks stifling innovation and undermining the region’s competitiveness in the global tech race.
According to reports from the Financial Times, Reuters, and POLITICO, the European Commission is preparing a package of amendments—dubbed the “Digital Omnibus”—to simplify and delay sections of the AI Act and other tech laws. The proposed changes could be unveiled as soon as November 19, 2025, but remain subject to further negotiation among EU member states and the European Parliament.
At the heart of the debate is the AI Act, passed in 2024, which bans controversial uses of AI such as social scoring and real-time facial recognition, and imposes strict requirements on high-risk applications in areas like healthcare, policing, and employment. These rules apply not only to companies inside the EU, but to any firm offering AI products or services to European customers. The law also includes heavy fines for violations and far-reaching transparency obligations for global tech firms.
But the regulatory tide appears to be turning. As Fortune reported, the European Commission’s “simplification agenda” aims to create a more favorable business environment, in part by responding to a call for evidence launched in September 2025 to gather research on how to streamline data, cybersecurity, and AI legislation. An unnamed senior EU official told the Financial Times that Brussels has been “engaging” with the Trump administration on potential adjustments to the AI Act and other digital regulations, reflecting a broader effort to ease the legislative load.
Thomas Regnier, a Commission spokesperson, told Fortune, “When it comes to potentially delaying the implementation of targeted parts of the AI Act, a reflection is still ongoing within the Commission. Various options are being considered, but no formal decision has been taken at this stage.”
Draft documents seen by Reuters and POLITICO suggest several significant changes are under consideration. Among them: companies deploying high-risk AI systems could receive a one-year “grace period” before enforcement begins, allowing firms already using such technology to make necessary adjustments without market disruption. Additionally, penalties for transparency violations—such as failing to clearly label AI-generated content to combat deepfakes and misinformation—may be postponed until August 2, 2027, giving companies and developers “sufficient time” to adapt to new obligations.
The Digital Omnibus package also proposes exempting companies from registering AI systems in the EU’s high-risk database if those systems are used only for narrow or procedural tasks. The Commission insists these are “targeted simplification measures aimed at ensuring timely, smooth and proportionate implementation,” according to the draft document reviewed by Reuters.
Yet, the changes go beyond the AI Act. As POLITICO revealed, the Commission is also considering far-reaching amendments to the General Data Protection Regulation (GDPR), Europe’s flagship privacy law, to further benefit AI developers and reduce regulatory red tape. The stated aim is to boost business competitiveness and keep Europe in the running as a global tech power.
The push for simplification comes against a backdrop of fierce criticism from industry leaders and investors. Fabricio Bloisi, chief executive of Prosus—one of the world’s largest tech investors—warned during a London event that the UK and Europe are “losing the innovation game.” According to The Times, Bloisi argued that European rules put regulation before commercial concerns, creating so much red tape that “it was hard for anything new to get off the ground.” He said, “We are losing, and we are even writing regulations that make us move even slower.”
Bloisi’s frustration was not merely theoretical. In February 2025, Prosus acquired Just Eat for €4.1 billion, but had to reduce its €1.6 billion stake in Delivery Hero to satisfy Brussels’ competition concerns—a process he described as an example of excessive bureaucracy. Despite these hurdles, Prosus continues to see opportunity in Europe, with nearly $20 billion earmarked for investment and a goal to grow the continent’s first trillion-dollar tech business. The company reported robust financial results for 2025, with revenue up 13% to $6.2 billion and adjusted EBIT surging to $443 million from $38 million the previous year.
Tech companies, from startups to giants like Apple, Meta, and Alphabet, have also sounded the alarm over the AI Act’s complexity and compliance costs. They argue that the law’s broad definitions of “high-risk” AI could discourage experimentation and make it harder for smaller developers to compete. According to Fortune, both Meta and Alphabet have warned that the Act could stifle innovation by creating bureaucratic hurdles and high compliance costs.
The criticism is not limited to industry insiders. The Trump administration has repeatedly expressed concerns over Europe’s regulatory approach. At the Paris AI Summit earlier this year, U.S. Vice President J.D. Vance publicly warned that “excessive regulation” of AI in Europe could cripple the emerging industry. The U.S. government has advocated for a lighter touch, arguing that innovation should be prioritized, especially as the global AI arms race with China intensifies. Most U.S. AI regulation is being enacted at the state level, with California leading the way on strict rules for emerging technologies.
Europe’s regulatory ambitions have even led to diplomatic friction. President Trump has threatened to increase tariffs on countries that “discriminate” against American technology companies, further raising the stakes for EU policymakers as they weigh the risks and rewards of their approach.
Not everyone is opposed to regulation. Bloisi acknowledged that some rules, such as internet safety laws for children, are beneficial. However, he warned that well-intentioned regulations can have the “unintended consequence” of solidifying the dominance of U.S. tech giants. “Many people were not focusing on European tech at all and to me, this is absurd because it is a big opportunity,” he said, expressing hope that with the right balance, Europe could foster its own global champions.
As the November 19 deadline for the Digital Omnibus approaches, all eyes are on Brussels. The outcome will shape not only the future of AI and tech innovation in Europe, but also the continent’s place in an increasingly competitive digital world. Whether the proposed changes will be enough to satisfy critics—and still protect European values—remains to be seen.
For now, the EU stands at a crossroads, navigating the delicate balance between safeguarding its citizens and unleashing the next wave of digital innovation.
