The European Union's journey toward regulating artificial intelligence has entered another period of uncertainty. BBVA compares the EU's decade-long effort to regulate AI with Odysseus's journey back to Ithaca, noting that Europe's original push for trustworthy AI began in 2017. The EU recently postponed the implementation of much of the AI Act until December 2027, highlighting how quickly technological developments have overtaken the regulatory framework originally designed to govern them.
The biggest complication has been the rapid arrival of generative AI and general-purpose models. The EU's original regulatory approach was largely designed around specific AI applications and risk categories, but the emergence of powerful foundation models forced lawmakers to introduce additional requirements. This contributed to delays in finalizing the AI Act, and the approaching August 2026 deadline for high-risk AI obligations created further pressure because supporting guidance from the European Commission's AI Office was not ready.
The EU's response, according to BBVA, shows an important realization: regulation alone cannot make Europe competitive in AI. Alongside the AI Act, Europe is attempting to increase investment, expand computing infrastructure, improve access to data and develop AI talent. The proposed Cloud and AI Development Act (CADA) is part of this strategy, aiming to coordinate investment and strengthen European control over critical cloud and AI infrastructure. At the same time, emerging cybersecurity concerns—including the possibility that advanced AI could facilitate cyberattacks—are creating additional reasons for governments to update their policies.
The broader lesson is that AI policy has become a race between regulation and technological progress. Europe wants to establish trustworthy and accountable AI, but lengthy regulatory processes can create uncertainty for businesses and potentially leave European companies behind competitors in the US and China. The challenge is therefore to find a balance between safety and speed: rules need to protect citizens and establish accountability without becoming so slow or ambiguous that they discourage innovation. BBVA's central question is ultimately whether Europe will complete its regulatory journey in time to remain competitive in the next phase of AI development, rather than arriving at its destination only after the global AI race has moved somewhere else.
