Technology industry body DigitalEurope called on the European Union (EU) to avoid over-regulating AI foundation models and create a situation that would force start-ups to leave the region, as the bloc enters final negotiations over crucial laws to govern the sector.

DigitalEurope issued an open letter, signed by 32 of the continent’s digital associations, explaining that only 8 per cent of companies in Europe currently use AI, significantly far from a European Commission target for 75 per cent by 2030.

In addition, it stated just 3 per cent of the world’s “AI unicorns” came from the EU, warning the continent’s competitiveness and financial stability depends on the ability of companies to deploy AI in areas such as green tech, health, manufacturing or energy.

To that end, it wants the EU’s upcoming AI Act, which is now the subject of final negotiations between lawmakers and member states, to “give AI in Europe a fighting chance” by not imposing excessive red tape on areas such as foundation models and general purpose AI (GPAI).

“For Europe to become a global digital powerhouse, we need companies that can lead on AI innovation also using foundation models and GPAI.”

The letter continued: “As European digital industry representatives, we see a huge opportunity in foundation models, and new innovative players emerging in this space, many of them born here in Europe. Let’s not regulate them out of existence before they get a chance to scale, or force them to leave.”

As part of a list of recommendations, signatories backed a joint proposal from France, Germany and Italy to limit the scope of AI rules for foundation models to certain transparency standards. DigitalEurope argued the AI Act did not need to regulate every new technology, and it supported an approach that focused on high-risk uses.

The letter also raised concerns that the AI Act, given its broad scope, could overlap with rules in other sectors such as healthcare.