You Can’t Regulate a GPU Into Existence
Europe would like digital sovereignty to be a jurisdictional problem. It would be much easier for EU bureaucrats if the path to frontier AI ran through Brussels, could be secured by certification, and depended mainly on where a given cloud provider is incorporated. Unfortunately, the binding constraints are less cooperative: GPUs, chips, memory, power, capital, and the inconvenient fact that much of the relevant capacity is already spoken for.
On May 27, after repeated delays, the European Commission is expected to unveil the Cloud and AI Development Act (CAIDA), the centerpiece of its broader “Tech Sovereignty” package. In a new International Center for Law & Economics (ICLE) issue brief published today, I argue that the stricter versions of CAIDA favored by some stakeholders would impose most of their costs on European users, businesses, and public institutions. The package’s implied objective—legal immunity from non-European Union legal systems accessing EU data—is also unlikely to be achievable in practice.
The empirical backbone of the brief comes from SemiAnalysis’ research on the artificial-intelligence infrastructure market. Their numbers, more than the political messaging surrounding the package, make the clearest case against a categorical version of CAIDA.
This post puts those numbers front and center, while pointing readers to the full brief for the legal and policy analysis that follows from them.