The European Commission has laid out plans to simplify and lighten data and AI regulation in a move that could encourage technology M&A.

In November the Commission published The Digital Omnibus Package, a legislative proposal that aims to simplify and ease the regulatory burden of its digital rulebook, which governs data, cybersecurity, and AI, and came into force in 2024.

Europe has some on the strictest AI and data privacy laws in the world, but is reviewing its AI and data frameworks as part of a wider programme across the EU to improve the bloc’s global competitiveness and cut administrative red tape for businesses.

Proposed changes outlined in the Omnibus include measures that will make it easier for technology companies to train AI using the personal data of EU citizens, adapt the definition of private data to exclude anonymized data, and potentially extend the grace period for the inclusion of watermarking of audiovisual content produced by AI.

A spark for technology M&A

The Digital Omnibus proposals still have to be approved by the majority of EU member states and the European Parliament, but they signal the Commission’s intent to keep pace with technology development and growth in the US and China.

Large technology companies, including Apple and Meta, have argued that EU AI and data regulation stretches too far and stifles innovation, and have held them back from releasing new products in Europe because regulation is viewed as too complex.

If adopted, the Omnibus changes could alleviate tech company concerns and encourage more M&A and investment into the European market.

Adoption of AI across Europe has lagged the US, with an Accenture study showing that 56% of large European organizations have not made transformative AI investment, which has impacted the productivity and competitiveness of the European labor force. Improving AI capability has the potential to boost business revenues in Europe by as much as €200 billion, according to Accenture estimates.

Lightening AI regulation will make it easier for European companies to deploy AI in their organizations and could encourage more M&A in the space.

According to law firm White & Case, the US has accounted for almost three quarters of venture capital investment into AI-native companies, versus less than a less than 12% share for Europe. The combination of less imposing AI regulatory barriers with EU initiatives to support AI investment, such as the €200 billion InvestAI initiative announced b Commission President Ursula von de Leyen, have the potential to transform the AI M&A landscape in Europe and close to the gap to other regions.

The Digital Omnibus proposals still have a way to go before formal adoption but lay out a framework to provide a timely kickstart for M&A investment in Europe’s technology and AI companies and infrastructure.