In a rapidly changing world, Europe’s success will be measured by its ability to drive digital innovation. In an era defined by geopolitical tension and rapid technological change, digital sovereignty and the competitiveness of domestic companies are becoming key to the EU’s political and economic resilience. Yet the very rules intended to build trust and security are now threatening to undermine innovation.
Recent reports by Enrico Letta and Mario Draghi highlight a growing concern: Europe is stifling itself with excessive regulation. Since 2019, the EU has introduced over 13,000 legal acts – nearly four times as many as the United States in the same period. Nowhere is the regulatory burden felt more acutely than in the digital space. Vague legal definitions, overlapping rules, and a lack of technological neutrality are creating mounting bureaucracy and legal uncertainty – particularly for small and medium-sized enterprises (SMEs).
A key challenge is the absence of clear, technology-neutral legislation. The AI Act, for example, was initially intended to create a risk-based framework. But late-stage amendments – spurred by the rise of generative AI – replaced risk-based logic with user thresholds, disrupting the original structure. Similar issues plague other laws like the Data Act, which contains ambiguous definitions that are difficult to apply in complex B2B scenarios.
On top of this, many EU digital laws take a consumer-focused (B2C) perspective that doesn’t translate well into industrial or business-to-business contexts. Compliance burdens escalate, while practical benefits remain limited. At the same time, strict enforcement mechanisms – often involving potentially devastating fines – deter companies from embracing data-driven business models. The unintended result: a shift toward “data-light” innovation, which undermines Europe’s ambitions for a thriving digital economy.
But it doesn’t have to be this way. Europe already has a proven regulatory model to draw from: the New Legislative Framework (NLF). For decades, the NLF has balanced safety, innovation, and clarity in product regulation through harmonized, technology-neutral requirements and voluntary standards. This approach offers a blueprint for digital regulation – one that ensures legal certainty for businesses while encouraging innovation.
What Europe needs now is a strategic reset. Rather than piecemeal fixes or more layers of compliance, the EU must shift toward coherent, future-ready digital regulation. That means embracing technology-neutral principles, reducing duplication, simplifying definitions, and placing greater trust in businesses through incentive-based frameworks – such as secure and economically viable EU data spaces.
Innovation and regulation should not be seen as opposing forces. When done right, smart regulation can empower innovation and strengthen Europe’s role in the digital world. But to get there, we need bold policy decisions and a willingness to rethink the current path.
Read the entire publication „Regeln, die beflügeln – Europas digitale Innovationskraft im regulatorischen Korsett “ here as pdf. Please note, to date the publication is only available in German.
