European tech startups are struggling to keep pace with their U.S. counterparts due to the European Union’s stringent AI regulations, according to a new report by The App Association.
Nearly 60% of European small tech firms reported product development delays caused by regulatory requirements, compared to 44% of U.S. companies.
Today, the @EU_Commission unveiled the Apply AI Strategy to expand AI use in industry and government—but without fixing restrictive regulations, Europe risks falling further behind.
— Center for Data Innovation (@DataInnovation) October 8, 2025
Read @castrotech's statement:https://t.co/RDfxVH6jlL pic.twitter.com/Kh4kCnfnW5
The EU’s AI Act, which governs general-purpose AI and data safety, has forced a third of European startups to remove or downgrade features to stay compliant.
Europe’s AI rules slow tech startups while US speeds ahead, report findshttps://t.co/bmiYoc1rM1
— Semafor (@semafor) October 9, 2025
By contrast, the U.S., under President Donald Trump, continues to move faster in AI innovation, as federal regulations remain limited and states experiment with lighter frameworks.
Bank of England warns of potential AI bubblehttps://t.co/qb3s9vzMmm
— Semafor (@semafor) October 9, 2025
Critics argue Europe’s overregulation risks stifling competitiveness against the U.S. and China.
“At the same time Europe is saying they want more competition, they’re creating an environment that makes it less likely,” said Morgan Reed, president of The App Association.
Also read:
The Report can be accessed here.
TIPP Staff
