As artificial intelligence, quantum computing, and digital infrastructure reshape global power dynamics, the relationship between the United States and the European Union stands at a critical crossroads. Yet the EU’s pride in being the world’s leading digital regulator introduces significant challenges for transatlantic cooperation and hurts European consumers. While the General Data Protection Regulation (GDPR), Digital Markets Act, Digital Services Act, Data Act, and EU AI Act aim to protect consumers, they impose substantial compliance burdens and hefty fines that stifle innovation, discourage investment, and compel companies to operate under heavy legal constraints. As a result, European citizens will receive new technologies later than their global counterparts—or may miss out entirely—as companies like Apple, Meta, OpenAI, and Google delay or restrict product launches due to regulatory uncertainties.

Perhaps most concerning is the EU’s growing dependence on foreign technology despite its regulatory zeal. Rather than fostering local tech giants, European regulations have often hindered local startups, forcing the continent to rely heavily on US and Chinese companies for AI, cloud computing, and digital infrastructure. This weakens European digital sovereignty while cementing the dominance of foreign players that can afford compliance costs. As global competition intensifies, particularly with China, the US and EU should pivot from regulatory confrontation to collaborative innovation and a partnership that leverages their complementary strengths rather than disabling the innovation pathway towards the next generation of the digital economy.

Today, the adversarial relationship in which the EU positions itself as a check on American tech dominance risks undermining the innovation needed to enable new technology to help solve our most pressing challenges. When regulation becomes the primary focus, investment capital flows elsewhere, startups struggle to scale, and technological advancement slows.

The flow of capital is essential for technological advancement. The US and EU should implement policies that encourage investment in emerging technologies. Both regions could speed up development in ways neither could accomplish independently. A reimagined US-EU technology relationship could establish an innovation corridor, reducing regulatory barriers and bureaucratic hurdles and offering incentives for industries and companies that invest in strategic sectors. The EU’s tendency toward heavy-handed enforcement and significant fines on American tech companies sends a troubling signal to investors. A more balanced approach would maintain necessary protections around agreed-upon areas of interest, such as data protection and cybersecurity improvements, while creating an environment where capital can flow freely toward promising innovations.

Privacy and data protection are also essential to consumer trust and the success of emerging technologies, and we should continue evolving our data protection policies with the US-EU Data Privacy Framework. We can protect individuals while enabling technological progress by focusing on technical solutions like advanced encryption, privacy-preserving machine learning, and user-controlled data frameworks. Elsewhere, recent cyberattacks on financial institutions, public utilities, core infrastructure, and government agencies highlight the urgent need for improved collaboration in cybersecurity. Instead of fragmented approaches, the US and EU should work toward unified frameworks for information sharing, threat detection, and incident response, as many of these attacks exploit similar vulnerabilities, such as mandatory backdoors built into the networks due to regulatory compliance rules.

The demand for strong education and workforce development underpins all these priorities and provides another area for cooperation. Both regions encounter skill gaps in crucial areas such as AI, cybersecurity, and quantum computing. By establishing joint educational initiatives, exchange programs, specialized training, and collaborative research, the US and EU can cultivate the talent pipeline necessary for fostering technological innovation.

The greatest challenge in rebuilding the transatlantic tech alliance lies in shifting Europe from a conventional regulatory mindset to an innovative one. Today’s technological challenges and opportunities are too significant for the US and EU to tackle as adversaries. By prioritizing innovation over regulation, investment over punishment, and collaboration over confrontation, we can establish a transatlantic technology ecosystem that fosters global leadership while embodying our shared values.

With so many opportunities for collaboration represented by new technologies, now is the time to rebuild the transatlantic tech alliance with innovation—not regulation—as its foundation.

Learn more: Taking On Government Bureaucracy (with Shane Bigelow) | AI and Jobs: Measuring Impact and Building New Assessment Tools | The Digital Markets Act: Security and Innovation Challenges in Tech Regulation | Open App Markets Act: A Misguided Approach That Could Stifle America