Issue #14 - January 8, 2026

EU Tech Policy: trends to watch in 2026

US Pressure is still mounting on EU Tech regulation, consistent with JD Vance remarks at AI Paris Summit in Feb 2025, and the DSA is under potential threat - a signal reiterated with the US travel ban on Thierry Breton. Upcoming files such as the Digital Fairness Act, likely seen as an additional regulation targeting US big tech will face unprecedented pressure. What’s new is pressure will also be domestic. The EU Parliament is less liberal and more populist than the former, populist parties are gaining traction across the EU and despite a lack of a clear alliance between them, they all show contempt for unnecessary regulatory burden and are building ties with the EU industry on the promise of relaxing rules which align with the US foreign policy agenda. That being said, the divide between "accelerationists" (led by Marc Andreessen and others) and “decelerationists” (led by Steve Bannon) when it comes to AI policy shows that even among Trump supporters, a very open debate is going on over whether tech should be further regulated. This divide somehow will likely play out in Europe as well, the focus of the US being to dominate the AI race, while for Europe it’s mostly about whether we can still make it on the podium. In this context, European populist parties will have to walk a narrow path of both advocating for looser rules while supporting a sovereign agenda that promotes EU companies over foreign ones. This risks to prove complex in practice since the US will push for a trade deal that incentivises the success of US tech companies in the EU.

While the question of EU’s competitiveness will remain a main point of focus for policymakers in 2026, it’s likely no progress will be made, due to political and institutional blockers. Social democrats and PPE will stick to the political prospect of implementing Draghi/Letta recommendations, but will keep facing Member state led headwinds. 2025 Nobel prize laureate Philippe Aghion who has gained new fame on his work on destructive creation and innovation might add to the policy debate the idea of a new treaty/referendum on the future of Europe over the question of further economic integration at EU level. This issue has also been flagged in a recent report from Tony Blair Institute. While the EC has mostly suggested technical measures, the EU is facing more fundamental questions only member states and the Council can respond to, such as defining a EU-level policy on skills, energy and compute. But to change, policymakers will first need to translate these ideas into a desirable political program that citizens are willing to support - an outcome unlikely to happen in 2026 since major elections (France, Italy, Spain) will take place in 2027.

Beyond these institutional challenges, technological shifts are also reshaping the policy landscape. A new generation of AI is about to emerge, both led by the progress of LLMs and the emergence of world models. Already, the CES of Las Vegas that takes place in early 2026 has signaled that robotics, embodied AI and physical AI are the next tech consumer trend. The smart glasses developed by Meta and EssilorLuxottica have gained significant traction in the US, confirming that the integration of LLM technology and AI agents in consumer products is now ripe for adoption. From a policy point of view, that could mean that the EU both needs to create an innovation policy that helps sustain growth and leadership in this field, and second that existing regulations should be assessed to identify what is missing or potentially slowing down its implementation. Some areas of concern could emerge over the questions of privacy, and cybersecurity since agents can fully operate when they have access to multimodality and are able to read in real time their physical environment, increasing reliance on sensitive data (body sensors, etc.) and from public spaces. Yann LeCun who is about to launch in Paris the Advanced Machine Intelligence Labs, focused on world models, with a potential initial fundraising of 500M euros, targeting a €3 billion valuation, which would represent one of the largest pre-launch AI fundraises in European history, confirms Europe can still play a significant role in the future of AI. In this context, the EU should roll out an innovation agenda that identifies how to position the continent as a leader on physical AI and world models.