European Union flags fly in front of the headquarters of the European Commission, in Brussels, Belgium, on February 1, 2023.
yves herman | Reuters
When Gerard de Graaf left Europe for San Francisco almost a year ago, his work took on a whole new dimension.
De Graaf, a 30-year veteran of the European Commission, was tasked with resuscitating the EU office in the Bay Area. His title is Senior Digital Envoy for the United States, and since September his main job has been to help the tech industry prepare for new legislation called The Digital Services Act (DSA), which comes into effect. Friday.
At the time of his arrival, the metaverse was winning out over artificial intelligence as everyone talked, tech giants and emerging startups were shedding thousands of jobs, and the Nasdaq was heading for its worst year since the 2008 financial crisis.
Within the scope of de Graaf’s competence, companies, including Meta, Google, Apple And Amazon Since April, we have had to prepare for the DSA, which is inspired by banking regulations. They face fines of up to 6% of their annual income if they fail to comply with the law, which was introduced in 2020 by the EC (the executive arm of the EU) to reduce the spread of illegal content in line and assume more responsibilities.
Arriving as an envoy, de Graaf saw more action than expected. In March, there was the sudden implosion of the iconic Silicon Valley bank, the second largest bank failure in US history. At the same time, OpenAI’s ChatGPT service, launched late last year, was sparking an arms race in generative AI, with tech money flowing into new chatbots and big models. of language (LLM) that feed them.
It’s been a “strange year in many ways,” de Graaf said from his office, located with the Irish consulate, on the 23rd floor of a building in downtown San Francisco. The European Union has not had an official presence in Silicon Valley since the 1990s.
De Graaf has spent much of his time meeting with executives, policy teams, and technologists from major tech companies to discuss regulations, the impact of generative AI, and competition. Although the regulations are enforced by the EC in Brussels, the new outpost has been a useful way to foster better relations between the US tech sector and the EU, de Graaf said.
“I think there was a conversation that we needed to have that didn’t really happen,” de Graaf said. With a hint of sarcasm, de Graaf said someone with “infinite wisdom” decided the EU should pull out of the region during the internet boom, just “when Silicon Valley was taking off and kept getting stronger.
According to him, at the time, the tech industry believed that the Internet was “a different technology that moves very quickly” and that “policy makers don’t understand it and can’t regulate it”.
Facebook Chairman and CEO Mark Zuckerberg arrives to testify before the House Financial Services Committee on ‘a review of Facebook and its impact on the financial services and housing sectors’ at the office building of Rayburn House in Washington, DC on October 23, 2019.
Mandel Ngan | AFP | Getty Images
However, some big tech leaders have shown signs they’re taking DSA seriously, de Graaf said. He noted that Meta CEO Mark Zuckerberg had met Thierry Breton, the EU’s internal market commissioner, to go over some details of the rules, and that X owner Elon Musk had publicly supported the DSA after meeting Breton.
De Graaf said he sees “a bit more respect and understanding for the position of the European Union, and I think that accelerated after generative AI.”
“A serious commitment”
X, formerly known as Twitter, has withdrawn from the EU’s voluntary guidelines to combat disinformation. There was no penalty for not participating, but X must now comply with the DSA, and Breton said after meeting Musk that “countering misinformation will be a legal obligation.”
“I think generally we’ve seen a serious commitment from big business, also in Europe and around the world, to prepare and prepare themselves,” de Graaf said.
The new rules require platforms with at least 45 million monthly active users in the EU to provide risk assessment and mitigation plans. They must also allow certain researchers access to their services for inspection in case of harm and offer more transparency to users about their recommendation systems, even allowing users to change their settings.
Timing could be a challenge. As part of cost-cutting measures implemented earlier this year, many companies have laid off staff. trust and safety teams.
“You ask yourself the question, will these companies still have the capacity to implement these new regulations?” says de Graaf. “Many of them assured us that the redundancy process gave them a renewed sense of confidence and security.”
The DSA doesn’t require tech companies to keep a certain number of workers safe and secure, de Graaf said, just that they follow the law. He nevertheless said that a social media platform he declined to name gave a response “which was not entirely reassuring” when asked how it planned to monitor disinformation in Poland during the upcoming elections. of October, because the company only has one person in the region. .
This is why the rules include transparency on what exactly the platforms are doing.
“There are a lot of things we don’t know, like how these companies moderate content,” de Graaf said. “And not just their resources, but also how their decisions are made about what content will stay and what content will be removed.”
De Graaf, a married Dutchman with two children, has spent the past three decades delving into regulatory issues for the EC. He previously worked on the Digital Services Act and the Digital Markets Act, European legislation focusing on consumer protection and rights and enhancing competition.
This is not his first trip to the United States. From 1997 to 2001, he worked in Washington, D.C., as “Commercial Advisor to the European Commission Delegation to the United States,” according to his biography.
Despite all the talk of San Francisco’s “catastrophic loop,” de Graaf said he sees a different level of energy in the city as well as further south in Silicon Valley.
There’s still “so much vibrancy” in San Francisco, he said, adding that it’s filled with “so interesting and objective people that I find incredibly refreshing.”
“I meet some very, very interesting people here in Silicon Valley and in San Francisco,” he said. “And it’s not just companies that are forward-thinking as the people behind them, so the conversations you have here with people are really rewarding.”
The boom of generative AI
Generative AI was a practically alien concept when de Graaf arrived in San Francisco last September. It’s now the only topic of conversation at technical conferences and cocktail parties.
The rise and rapid spread of generative AI has led a number of big tech companies and prominent executives to push for regulations, citing the technology’s potential influence on society and the economy. In June, the European Parliament took a major step in adopting the The EU AI Act, which would represent all EU regulations on AI. It is still far from being a law.
De Graaf pointed out the irony of the industry’s attitude. Tech companies that have for years criticized the EU for overly aggressive regulations are now asking, “Why is it taking you so long? says de Graaf.
“We hope to reach an agreement on the text by the end of this year,” he said. “And then we always have these transition periods where the industry has to prepare, and we have to prepare. It can be two years or a year and a half.”
The rapidly changing landscape of generative AI makes it difficult for the EU to quickly formulate regulations.
“Six months ago, I think our biggest concern was to legislate a handful of companies – the extremely powerful, resource-rich companies – that are going to dominate,” de Graaf said.
But as more powerful LLMs become available for free, the technology spreads, making regulation more difficult because it’s not just about dealing with a few large companies. De Graaf met with local universities like Stanford to learn more about the transparency of LLMs, how researchers can access the technology, and what kind of data companies could provide lawmakers about their software.
A proposal being floated in Europe is the idea of publicly funded AI models, so that control is not entirely in the hands of big US corporations.
“These are questions that policymakers in the United States and around the world are asking,” de Graaf said. “We don’t have a crystal ball that would allow us to predict everything that happens.”
While there are ways to expand the way AI models are developed, there is little doubt about where the money for processing power is going. Nvidiawhich just posted blistering earnings for the last quarter and has seen its stock value triple this year, is by far the leader in providing the kind of chips needed to power generative AI systems.
“This company has a unique value proposition,” de Graaf said. “It’s unique, not because of scale or a network effect, but because their technology is so advanced that it has no competition.”
He said his team met “fairly regularly” with Nvidia and its policy team and learned “how the semiconductor market is changing.”
“It’s a useful source of information for us and, of course, where the technology is going,” de Graaf said. “They know where many industries are stepping up and are in the loop or will move faster than other industries.”
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