Europe has regulated itself into managed decline, and the bureaucrats running Brussels somehow think it's progress.
The EU's AI Act, now in full legal effect, classifies AI systems by risk tier and subjects high-risk applications to mandatory conformity assessments, technical documentation requirements, and ongoing human oversight obligations before a single product reaches market. A startup in Warsaw or Lisbon building diagnostic software now faces compliance costs that scale in months of legal work before the product earns its first euro. A venture-backed competitor in San Francisco ships to customers while Europeans are still filing paperwork.
This is the pattern, repeated across every sector the Commission touches.
The General Data Protection Regulation has cost European companies an estimated 200 billion euros in compliance spending since 2018. That capital didn't disappear; it shifted from engineers and servers to lawyers and documentation systems. You can not get that productivity back. Meanwhile, Amazon, Google, and Meta absorbed the compliance cost like a rounding error and locked out smaller rivals that couldn't afford to do the same. Regulatory burdens fall heaviest on entrants, not incumbents, and Brussels handed Silicon Valley a moat while genuinely believing it was punishing them.
Incumbents write the standards, sit on the advisory committees, and embed their legal teams inside the drafting process. Joseph Schumpeter identified creative destruction as capitalism's core engine. The EU has built a regulatory system that protects the engine's replacement parts from the fire.
Germany's industrial output contracted in both 2024 and 2025. French productivity growth has averaged below 0.8 percent annually for a decade. The EU's share of global venture capital sits below 15 percent. Bureaucratic systems produce exactly the outcomes their incentive structures reward. European regulators are rewarded for caution, documentation, and control, never for the startup that got strangled quietly before anyone noticed.