European Union flags flutter outside the EU Commission headquarters, in Brussels, Belgium, February 1, 2023
Yves Herman | Reuters
When Gerard de Graaf moved from Europe to San Francisco almost a yr ago, his job had a really different feel to it.
De Graaf, a 30-year veteran of the European Commission, was tasked with resurrecting the EU office in the Bay Area. His title is senior envoy for digital to the U.S., and since September his fundamental job has been to assist the tech industry prepare for new laws called The Digital Services Act (DSA), which fits into effect Friday.
At the time of his arrival, the metaverse trumped artificial intelligence as the talk of the town, tech giants and emerging startups were cutting hundreds of jobs, and the Nasdaq was headed for its worst yr since the financial crisis in 2008.
Inside de Graaf’s purview, firms including Meta, Google, Apple and Amazon have had since April to prepare for the DSA, which takes inspiration from banking regulations. They face fines of as much as 6% of annual revenue in the event that they fail to comply with the act, which was introduced in 2020 by the EC (the executive arm of the EU) to cut back the spread of illegal content online and provide more accountability.
Coming in as an envoy, de Graaf has seen more motion than he expected. In March, there was the sudden implosion of the iconic Silicon Valley Bank, the second-largest bank failure in U.S. history. At the same time, OpenAI’s ChatGPT service, launched late last yr, was setting off an arms race in generative AI, with tech money pouring into new chatbots and the large language models (LLMs) powering them.
It was a “strange yr in lots of, some ways,” de Graaf said, from his office, which is co-located with the Irish Consulate on the twenty third floor of a constructing in downtown San Francisco. The European Union hasn’t had a proper presence in Silicon Valley since the Nineteen Nineties.
De Graaf spent much of his time meeting with top executives, policy teams and technologists at the major tech firms to debate regulations, the impact of generative AI and competition. Although regulations are enforced by the EC in Brussels, the new outpost has been a useful option to foster a greater relationship between the U.S. tech sector and the EU, de Graaf said.
“I feel there’s been a conversation that we would have liked to have that did probably not happen,” said de Graaf. With a touch of sarcasm, de Graaf said that someone with “infinite wisdom” decided the EU should step back from the region during the web boom, right “when Silicon Valley was taking off and going from strength to strength.”
The considering at the time inside the tech industry, he said, was that the web is a “different technology that moves very fast” and that “policymakers don’t understand it and cannot regulate it.”
Facebook Chairman and CEO Mark Zuckerberg arrives to testify before the House Financial Services Committee on “An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors” in the Rayburn House Office Constructing in Washington, DC on October 23, 2019.
Mandel Ngan | AFP | Getty Images
Nevertheless, some major leaders in tech have shown signs that they are taking the DSA seriously, de Graaf said. He noted that Meta CEO Mark Zuckerberg met with Thierry Breton, the EU commissioner for internal market, to go over a few of the specifics of the rules, and that X owner Elon Musk has publicly supported the DSA after meeting with Breton.
De Graaf said he’s seeing “a bit more respect and understanding for the European Union’s position, and I feel that has accelerated after generative AI.”
‘Serious commitment’
X, formerly often called Twitter, had withdrawn from the EU’s voluntary guidelines for countering disinformation. There was no penalty for not participating, but X must now comply with the DSA, and Breton said after his meeting with Musk that “fighting disinformation shall be a legal obligation.”
“I feel, usually, we have seen a serious commitment of massive firms also in Europe and around the world to be prepared and to prepare themselves,” de Graaf said.
The new rules require platforms with no less than 45 million monthly energetic users in the EU to offer risk assessment and mitigation plans. Additionally they must allow for certain researchers to have inspection access to their services for harms and provide more transparency to users about their suggestion systems, even allowing people to tweak their settings.
Timing could possibly be a challenge. As a part of their cost-cutting measures implemented early this yr, many firms laid off members of their trust and safety teams.
“You ask yourself the query, will these firms still have the capability to implement these new regulations?” de Graaf said. “We have been assured by a lot of them that in the technique of layoffs, they’ve a renewed sense of trust and safety.”
The DSA doesn’t require that tech firms maintain a certain variety of trust and safety employees, de Graaf said, just that they comply with the law. Still, he said one social media platform that he declined to call gave a solution “that was not entirely reassuring” when asked the way it plans to watch for disinformation in Poland during the upcoming October elections, as the company has just one person in the region.
That is why the rules include transparency about what exactly the platforms are doing.
“There’s lots we do not know, like how these firms moderate content,” de Graaf said. “And never just their resources, but in addition how their decisions are made with which content will stay and which content is taken down.”
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De Graaf, a Dutchman who’s married with two kids, has spent the past three many years going deep on regulatory issues for the EC. He previously worked on the Digital Services Act and Digital Markets Act, European laws targeted at consumer protection and rights and enhancing competition.
This is not his first stint in the U.S. From 1997 to 2001, he worked in Washington, D.C., as “trade counsellor at the European Commission’s Delegation to the United States,” in line with his bio.
For all the discuss San Francisco’s “doom loop,” de Graaf said he sees a unique level of energy in the city in addition to further south in Silicon Valley.
There’s still “a lot dynamism” in San Francisco, he said, adding that it’s crammed with “such interesting people and objective those that I find incredibly refreshing.”
“I meet very, very interesting people here in Silicon Valley and in San Francisco,” he said. “And it is not just the firms which might be sort of avant-garde as the people behind them, so the conversations you might have here with individuals are really rewarding.”
The generative AI boom
Generative AI was a virtually foreign concept when de Graaf arrived in San Francisco last September. Now, it’s about the only topic of conversation at tech conferences and cocktail parties.
The rise and rapid spread of generative AI has led to quite a few big tech firms and high-profile executives calling for regulations, citing the technology’s potential influence on society and the economy. In June, the European Parliament cleared a serious step in passing the EU AI Act, which might represent the EU’s package of AI regulations. It’s still a great distance from becoming law.
De Graaf noted the irony in the industry’s attitude. Tech firms which have for years criticized the EU for overly aggressive regulations are actually asking, “Why is it taking you so long?” de Graaf said.
“We are going to hopefully have an agreement on the text by the end of this yr,” he said. “After which we at all times have these transitional periods where the industry must prepare, and we want to prepare. That is likely to be two years or a yr and a half.”
The rapidly changing landscape of generative AI makes it tricky for the EU to quickly formulate regulations.
“Six months ago, I feel our big concern was to legislate the handful of firms — the extremely powerful, resource wealthy firms — which might be going to dominate,” de Graaf said.
But as more powerful LLMs change into available for people to make use of for free, the technology is spreading, making regulation more difficult as it is not nearly coping with just a few big firms. De Graaf has been meeting with local universities like Stanford to find out about transparency into the LLMs, how researchers can access the technology and what kind of information firms could provide to lawmakers about their software.
One proposal being floated in Europe is the idea of publicly funded AI models, so control is not all in the hands of massive U.S. firms.
“These are questions that policymakers in the U.S. and throughout the world are asking themselves,” de Graaf said. “We do not have a crystal ball where we are able to just predict every little thing that is happening.”
Even when there are methods to expand how AI models are developed, there’s little doubt about where the money is flowing for processing power. Nvidia, which just reported blowout earnings for the latest quarter and has seen its stock price triple in value this yr, is by far the leader in providing the sort of chips needed to power generative AI systems.
“That company, they’ve a singular value proposition,” de Graaf said. “It’s unique not due to scale or a network effect, but because their technology is so advanced that it has no competition.”
He said that his team meets “quite recurrently” with Nvidia and its policy team and they have been learning “how the semiconductor market is evolving.”
“That is a useful source information for us, and in fact, where the technology goes,” de Graaf said. “They know where a number of the industries are stepping up and are on the ball or are going to maneuver more quickly than other industries.”
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