Gerard de Graaf relocated from Europe to San Francisco a year ago to aid in the tech industry's readiness for the digital regulations that will be implemented this Friday. He has noted a stark transformation since his arrival, largely due to the emergent use of generative artificial intelligence. He stated in a CNBC interview that it had been an "extraordinary year in countless respects".
When Gerard de Graaf relocated from Europe to San Francisco almost a year ago, his position had a very unique feel to it. As the senior envoy for digital to the U.S., the 30-year veteran of the European Commission had been tasked with reviving the EU office in the Bay Area. His main job since September has been to support the tech industry in preparing for the Digital Services Act (DSA), which will come into effect this Friday.At the time of his appointment, metaverse was the main topic of discussion, tech giants and startups alike were making extensive layoffs, and the Nasdaq was on its way to recording its worst year since the 2008 financial crisis.Within de Graaf's purview, companies such as Meta, Google, Apple and Amazon have had since April to ready themselves for the DSA, which borrows aspects from banking regulations. Companies that do not abide by the act risk being subjected to penalties of up to 6% of their annual revenue. The DSA was developed in 2020 by the EC to restrict the circulation of illegal content online and to bring greater accountability.In his role as envoy, de Graaf has encountered more action than he anticipated. In March, the tech industry was rocked by the sudden failure of Silicon Valley Bank, the second largest bank failure in US history. At the same time, OpenAI's ChatGPT service, launched late the preceding year, was sparking off a competition in generative AI, with tech investors pouring money into new chatbots and the large language models (LLMs) powering them.When asked to reflect on the year, de Graaf described it as "strange in many ways" from his office co-located with the Irish Consulate on the 23rd floor of a building in downtown San Francisco. Interestingly, the European Union had not had a formal presence in Silicon Valley since the 1990s.De Graaf spent much of his time conversing with top executives, policy teams and technologists from the major tech players to debate regulations, the influence of generative AI and competition. While the EC is the body responsible for enforcing regulations from Brussels, the new mission has been of great help in helping the EU build a better relationship with the US tech sector, according to de Graaf.He went on to comment that "we needed to have a conversation that did not really take place" between the EU and Silicon Valley. With a sarcastic tone, de Graaf noted that somebody with "infinite wisdom" chose for the Union to take a step back from the region at the peak of the internet boom, "just when Silicon Valley was achieving huge success."The tech industry's perspective at the time, de Graaf said, was that the internet is a "distinct technology that shifts quickly" and that policymakers "do not understand it and cannot regulate it."
Despite this, Graaf has indicated that there has been some recognition from notable figures in the tech world of the DSA's standing. He highlighted the fact that Mark Zuckerberg, CEO of Meta, had a gathering with Thierry Breton, the European Commissioner for Internal Market, to deliberate on the details of the regulation, as well as the backing given to the DSA by Elon Musk after his conversation with Breton. Graaf disclosed that he has detected "a greater level of respect and understanding for the EU's stance, and this has enhanced further after the development of generative AI."
Formerly known as Twitter, X had opted out of the EU's voluntary guidelines for combating disinformation. There were no penalties for not signing up, but X must now adhere to the Digital Services Act (DSA) and, according to Breton after their meeting with Musk, "fighting disinformation must be made a legal requirement".De Graaf commented that "all over the world, and in Europe in particular, we have seen large companies expressing an earnest commitment to meet this challenge." The DSA requires all platforms that have a minimum of 45 million monthly active users in the EU to create risk assessment and mitigation plans. They must also enable certain researchers to have a regulatory supervision of their services to identify potential harms; plus they need to make users more aware of their recommendation systems and give them the possibility to modify them.Time might be an issue. As part of the financial savings implemented in the beginning of the year, some companies had to make redundancies from the trust and safety teams.De Graaf asked himself "will these big organisations have enough capacity to implement the new rules?" Several of them have told him that, during the process of the redundancies, they have reconsidered their commitment to trust and safety.The DSA does not demand a specific quota of trust and safety staff, yet one social media platform, as refused to be named, provided a response when questioned about how it intended to monitor disinformation in Poland during the upcoming October elections, that "was not entirely reassuring", since they have solely one person in the Region.This is why the regulations involve making clear what the companies are doing. De Graaf continued "we don't know much, such as how they moderate content. This includes not only the resources they will use, but also the means of deciding which content will be taken down and which will be left up".
De Graaf, a Dutch married father of two, has been researching regulatory issues for the EC for the last thirty years. Prior to the Digital Services Act and Digital Markets Act, UK legislation designed to protect consumers and afford them more rights, as well as strengthen competition, he occupied a post in Washington D.C. from 1997 to 2001 - 'Trade Counsellor' at the European Commission's Delegation to the United States. De Graaf has a different outlook for San Francisco from others who refer to 'doom loop' and claims to have discovered an alternative level of energy in the city, as well as further south in Silicon Valley. He comments on the city's 'dynamism', being full of 'interesting people and objective people', which he finds 'incredibly refreshing'. It's not just the 'avant-garde' firms he meets but also 'the people behind them' making conversation 'rewarding'.
When de Graaf came to San Francisco last September, generative AI was an unfamiliar concept. Today, however, it is the primary topic of discussion at technology conferences and social gatherings. This rapid spread of generative AI has brought about calls from the tech world's top executives and organizations for the establishment of explicit regulations, citing the possible impact of this technology on the economy and society. The EU AI Act, which would comprise the European Union's entire AI regulatory framework, was given one of its most significant approvals by the EU Parliament in June. However, the Act is still far away from becoming a law.
De Graaf found the industry's position humorous; technology corporations that have continued to criticize the EU for having overly rigorous regulations are now questioning why the law is taking so long to pass. Despite this, de Graaf is optimistic that a finalized version of the Act will be ready by the end of the year, followed by a transition period of a year and a half or two years for the industry to prepare.
The breakout of generative AI makes it difficult for the EU to rapidly create regulations. Previously the main focus was on the few wealthy and powerful companies that were predicted to take control of the technology. Now, however, that free and more advanced LLMs are widely available, the technology is spreading so quickly that the current regulations must be updated. De Graaf is presently speaking with universities such as Stanford to gain insight on the LLMs, data access to the software, and what information companies can provide authorities on their software. A possible answer being floated in Europe is the introduction of publicly funded AI systems to reduce the influence of U.S. tech giants. While the future of AI is uncertain, De Graaf has confirmed his team meets regularly with Nvidia and its policy team to learn about the developments in the semiconductor market and how the tech is evolving.
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