The Six Five team discusses Meta won’t do GAI in EU Or Brazil.
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Transcript:
Patrick Moorhead: So regulation has been a big topic related to generative AI, how that data is captured, how that data is processed and how that data is used here. Some countries have put what at least I consider some onerous halt or penalties so large you wouldn’t want to take the risk to do that. And as a natural byproduct of that, you have corporations who decided, “Okay. Let’s not do this.” So Dan, what is going on with Meta in the EU and Brazil?
Daniel Newman: Look, I think this is the first of many, not the last of an issue. So we talked about the security and speed. We have another issue that’s going on that’s kine of these two parallel paths of innovation and then privacy. So as we’ve seen in the past as we’ve launched social products, data-driven products, advertising products, the EU in particular, but also other countries around the world, in this case Brazil, have been somewhat steadfast to create what they communicate as a policy to protect their citizens and constituents from technology that maybe goes too far, that takes too much data, doesn’t clearly articulate how data is being used, potentially gives monopolistic powers to companies inside of certain regions, prioritizing products and services. Well, now, we’ve got the same situation going on with AI. So as we know, the US and a number of other countries, but specifically the US is aggressively wanting to have the technology leadership position in AI on a global scale. The vast majority of the large language models are being developed here in the US. The implementation of AI into these services, whether it’s Apple intelligence, Meta’s Meta AI, whether it’s OpenAI, these things are all aggressively challenging, things that have not yet been regulated or no policy has been defined around.
For instance, we really don’t have use rights policy defined yet around large language models and training. And we’re going to talk more about that actually when we talk about Apple, but the net of this is that basically Zuckerberg and Apple or, sorry, Meta is saying, “We’re just not going to launch our multimodal models in these regions.” And that’s, by the way, the point. They’re not saying, “We’re not going to do anything.” They’re kind of saying, “We’re not going to do the most cutting edge and make the most leading capabilities that we’re developing available in these markets because what we feel as a company,” and this my paraphrase of Zuckerberg, “is that we feel like we’re basically walking into a mine, a minefield,” that basically the EC, European Commission on competition that tends to regulate and has a revolving door of fines and taxations on big tech companies, no actual intent to really stop them, just find them as a fundraising activity is going to basically wait for them to launch these things and then they’re going to try to throw the book at them.
So he’s basically saying, “Look, we’re not going to do it.” And also in this case in Brazil, we’re going to hold out, we’re going to wait, we’re going to deploy these in markets that are more innovation friendly like here in the US, and we will grow that way and we will continue to give what I would call degraded or less viable technology to the EU into those markets in order to protect themselves from what could be massive fines. In some cases, these fines that the EU regulators put on can be percentages, up to 10 and more percent of all turnover of these companies if they don’t follow these rules. Now, that’s never happened. It’s never landed there. But in settlements, you’re talking about Microsoft, Meta, Qualcomm, Google, Amazon, have all seen multi billions of dollars over the last two decades of fines out of the EC for basically pushing innovation that is seen as somehow anticompetitive or breaking the rules of privacy and data.
So this is probably a first of its kind though, Pat, of a company actually coming out and just saying, “You know what? We’re not even going to do it.” In the past, it’s like they always do it and then they wait and see what happens. I think this is going to come down to a situation of what is the constituents, what are the people of the EU want in terms of not being behind on technology versus companies saying, “We don’t want to take the risk.” So it’s a really interesting kind of inflection and maybe the first of many where companies are going to say, “We’re just going to degrade the product and roll out less, and if you’re going to keep regulating us, we’re just going to give less technology and good luck building it there,” because as we know, nobody, Pat, is building this kind of technology in the EU.
Patrick Moorhead: Great breakdown there, Dan. This is classic barbell type of stuff that we’ve seen historically where there’s one end who is moving really quickly, and I don’t know if you want to call them decels or, I mean, all regulation is not bad. Imagine, we had no regulation of our highways and our airplanes and stuff like that, but classic historically, even when you’re looking at electricity and the safety and the value that that brings in, there were a ton of discussions about even AC versus DC. Thomas Edison was involved. I mean, a lot of historical things to look at here. I think some decels might say the only people that should be doing this should be the government like nuclear weapons and the potential damage that they can cause. So here we are, but I’m glad we’re having this conversation. It’s going to give bureaucrats more things to think about. Obviously, it’s giving tech companies more things to think about. One thing on a reputation is the EU is really getting a reputation that not only are they hindering innovation and they have very high tax rates and don’t really incent for innovation, companies, if you start your startup, that’s not where you want to put your house up. There’s a lot of other-
Daniel Newman: And if you do, buddy, you don’t stay, meaning the biggest ones ultimately start there and then they defect to somewhere where it’s more favorable. I looked at some charts on this. I mean, there’s nothing going on there. There’s no unicorn companies. It’s a handful.
Patrick Moorhead: And there was even discussion during the Figma meltdown with Adobe where it’s like if you’re a startup, do you even do anything for sale in the EU or what country do you go into? And then you’ve got UK Brexit it out and their CMA, right seems to be wanting to, I don’t know, lead with even more regulation than the EC. So anyways, this is natural. This is the discussion. I sit on the camp of, A, let’s accelerate. Increasing innovation has always had an effect on lowering prices and providing more things for society that are positive.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
