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Don’t water down Europe’s AI rules to please Trump, EU lawmakers warn

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Lawmakers who helped shape the European Union’s landmark AI Act are worried that the 27-member bloc is considering watering down aspects of the AI rules in the face of lobbying from U.S. technology companies and pressure from the Trump administration.

The EU’s AI Act was approved just over a year ago, but its rules for general-purpose AI models like OpenAI’s GPT-4o will only come into effect in August. Ahead of that, the European Commission—which is the EU’s executive arm—has tasked its new AI Office with preparing a code of practice for the big AI companies, spelling out how exactly they will need to comply with the legislation.

But now a group of European lawmakers, who helped to refine the law’s language as it passed through the legislative process, is voicing concern that the AI Office will blunt the impact of the EU AI Act in “dangerous, undemocratic” ways. The leading American AI vendors have amped up their lobbying against parts of the EU AI Act recently, and the lawmakers are also concerned that the Commission may be looking to curry favor with the Trump administration, which has already made it clear it sees the AI Act as anti-innovation and anti-American.

The EU lawmakers say the third draft of the code, which the AI Office published earlier this month, takes obligations that are mandatory under the AI Act and inaccurately presents them as “entirely voluntary.” These obligations include testing models to see how they might allow things like wide-scale discrimination and the spread of disinformation.

In a letter sent Tuesday to European Commission vice president and tech chief Henna Virkkunen, first reported by the Financial Times but published in full for the first time below, current and former lawmakers said making these model tests voluntary could potentially allow AI providers who “adopt more extreme political positions” to warp European elections, restrict freedom of information, and disrupt the EU economy.

“In the current geopolitical situation, it is more important than ever that the EU rises to the challenge and stands strong on fundamental rights and democracy,” they wrote.

Brando Benifei, who was one of the European Parliament’s lead negotiators on the AI Act text and the first signatory on this week’s letter, told Fortune Wednesday that the political climate may have something to do with the watering-down of the code of practice. The second Trump administration is antagonistic toward European tech regulation; Vice President JD Vance warned in a fiery speech at the Paris AI Action Summit in February that “tightening the screws on U.S. tech companies” would be a “terrible mistake” for European countries.

“I think there is pressure coming from the United States, but it would be very naive [to think] that we can make the Trump administration happy by going in this direction, because it would never be enough,” noted Benifei, who currently chairs the European Parliament’s delegation for relations with the U.S.

Benifei said he and other former AI Act negotiators had met with the Commission’s AI Office experts, who are drafting the code of practice, on Tuesday. On the basis of that meeting, he expressed optimism that the offending changes could be rolled back before the code is finalized.

“I think the issues we raised have been considered, and so there is space for improvement,” he said. “We will see that in the next weeks.”

Virkkunen had not provided a response to the letter, nor to Benifei’s comment about U.S. pressure, at the time of publication. However, she has previously insisted that the EU’s tech rules are fairly and consistently applied to companies from any country. Competition Commissioner Teresa Ribera has also maintained that the EU “cannot transact on human rights [or] democracy and values” to placate the U.S.

Shifting obligations

The key part of the AI Act here is Article 55, which places significant obligations on the providers of general-purpose AI models that come with “systemic risk”—a term that the law defines as meaning the model could have a major impact on the EU economy or has “actual or reasonably foreseeable negative effects on public health, safety, public security, fundamental rights, or the society as a whole, that can be propagated at scale.”

The act says that a model can be presumed to have systemic risk if the computational power used in its training “measured in floating point operations [FLOPs] is greater than 1025.” This likely includes many of today’s most powerful AI models, though the European Commission can also designate any general-purpose model as having systemic risk if its scientific advisors recommend doing so.

Under the law, providers of such models have to evaluate them “with a view to identifying and mitigating” any systemic risks. This evaluation has to include adversarial testing—in other words, trying to get the model to do bad things, to figure out what needs to be safeguarded against. They then have to tell the European Commission’s AI Office about the evaluation and what it found.

This is where the third version of the draft code of practice becomes problematic.

The first version of the code was clear that AI companies need to treat large-scale disinformation or misinformation as systemic risks when evaluating their models, because of their threat to democratic values and their potential for election interference. The second version didn’t specifically talk about disinformation or misinformation, but still said that “large-scale manipulation with risks to fundamental rights or democratic values,” such as election interference, was a systemic risk.

Both the first and second versions were also clear that model providers should consider the possibility of large-scale discrimination as a systemic risk.

But the third version only lists risks to democratic processes, and to fundamental European rights such as non-discrimination, as being “for potential consideration in the selection of systemic risks.” The official summary of changes in the third draft maintains that these are “additional risks that providers may choose to assess and mitigate in the future.”

In this week’s letter, the lawmakers who negotiated with the Commission over the final text of the law insisted that “this was never the intention” of the agreement they struck.

“Risks to fundamental rights and democracy are systemic risks that the most impactful AI providers must assess and mitigate,” the letter read. “It is dangerous, undemocratic and creates legal uncertainty to fully reinterpret and narrow down a legal text that co-legislators agreed on, through a Code of Practice.”

This story was originally featured on Fortune.com



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Trump’s tariffs are sending ultra-rich investors to Europe and Asia: ‘The world has changed in the last 3 months’

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Though President Donald Trump has said his aggressive tariff strategy, unveiled this week, will make the markets “boom,” it has so far resulted in a rout, with U.S. equity markets suffering their worst week since March 2020 and more pain likely on the way. And that’s sending ultra-wealthy investors to seek refuge from the financial storm abroad.

The average tariff rate is even higher than in the 1930s, “which means there is no modern-day precedent to predict the economic hit,” says Larry Adam, chief investment officer at Raymond James. The U.S. markets have been tanking in the aftermath, and analysts including from JPMorgan are ringing alarm bells about a potential recession this year. The preeminence and exceptionalism of the U.S. is now being questioned.

Investors are reacting accordingly. Worried about the effects of tariffs and other moves by the Trump administration that could hurt growth in the U.S.—such as defunding research efforts around the country—ultra high net worth and family office investors are rethinking their positions here, at least in the short term.

“We’ve seen a growing interest among high-net-worth family office clients in diversifying a portion of their portfolios outside the United States,” says Jon Ulin, private wealth advisor at Ulin & Co. Wealth Management. “This trend is largely driven by concerns over policy uncertainty and potential economic or market disruptions.”

Of course, many of these wealthy investors already hold sizable investments and real estate holdings abroad, particularly those who were born in another country or have dual citizenship somewhere. But the uncertainty now plaguing the U.S. economy is causing them to double down on looking for better growth opportunities and hedges abroad. Ulin’s team is now tilting managed portfolios more international than U.S. “to better navigate the trade war fall out of domestic stocks and the markets.”

“For them, investing internationally is not just about diversification, it serves as a currency hedge and provides access to government bonds and equities that may not be readily available in U.S. markets,” says Ulin.

At a media event Thursday, Goldman Sachs representatives said they are watching Trump’s moves closely. Many of their ultra-high net worth (UHNW) clients are asking for guidance, though they haven’t fled from U.S. equities just yet. But non-U.S. equities have outperformed so far this year, and broader diversification in general is a goal for the firm. Still, the firm is bullish on U.S. long-term given the country’s ability to innovate.

“There’s still some belief that even if things look murky in the U.S. … the U.S. may end up better than other countries on the other side of the tariffs,” said Elizabeth Burton, senior client investment strategist at Goldman Sachs.

That said, many UHNW clients were thinking of moving money out of the U.S. even before Trump’s so-called Liberation Day. Europe, for example, may be more attractive given its increase in defense spending. In Asia, India is attracting Goldman’s attention.

“For so long, being long the U.S., and particularly large cap U.S., was was the right investment,” said Matt Gibson, Goldman’s global head of the Client Solutions Group. “A lot of our clients in Q4 [2024], as they saw the election happen and so forth, started to wonder if keeping that trade on was the right thing to do.”

Tariff uncertainty is pushing those conversations into overdrive.

“The world has changed in the last three months in a material way,” said Marc Nachmann, Goldman’s global head of asset & wealth management. “Our conversations with clients right now include … how should we think about these tariffs? How should they make us rethink how we allocate all of our assets?”

This story was originally featured on Fortune.com



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Codex raises $15.8 million in round led by Dragonfly to build out a blockchain for stablecoins

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Spotify is pitching itself to advertisers as the anti-‘rotting and doom scrolling app’

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Have you ever thought about how much time you spend on Spotify, that is, actually inside the Spotify app? It’s easy to get lost for 30 minutes on TikTok or Instagram, but you probably don’t have the same instinct for the Swedish streaming app. 

Spotify, though, is keen to remind the advertising world just how much time their listeners spend actually navigating the app. 

A music app designed to operate in the background isn’t an obvious target market for advertisers, who would be inclined to regard the app’s users as passive or unengaged.

This could explain why the streaming platform’s ad revenue is so low. Spotify made $1.85 billion from ad-supported revenue in 2024, a fraction of the $13.8 billion it raked in from premium subscribers. 

However, as part of a new drive to boost ad-supported revenue, Spotify is trying to convince advertisers that its listeners are anything but passive.

“It’s more nutritious… rather than these high-caloric, quick things,” Alex Norstrom, Spotify’s co-president and chief business officer, told the New York Times about the Spotify app. 

Norstrom elaborated that this included the “Jam” function, which forces listeners to turn both technical and collaborative to create the ideal group playlist. He also pointed to listeners wanting to discover more about their favorite podcaster or settling in for an extended audiobook session.

“People just feel good when they’re on Spotify,” Lee Brown, Spotify’s global head of advertising, said on Wednesday. “How many apps can say that?”

Spotify aims to grow its advertising revenue by increasing the amount of time its users spend on the app. To that end, the group enhanced its offering of podcasts with a video function, making it functionally comparable to YouTube.  

“The more content users stream, the more advertising inventory we generally have to sell,” the group wrote in its 2024 annual report.

Its strategy to do so, as Brown summarized, was to pitch itself as the alternative to “rotting and doom-scrolling.”

Spotify’s pitch for advertisers comes at a time when brands are thinking more intentionally about where they publicize themselves. Elon Musk went to war with advertisers last year after many pulled funding from his X platform as its content turned more toxic. They began to return in the wake of the election of Donald Trump, who was heavily supported by Muck.

The company has been more deliberate in its message to advertisers in recent months.

What Wednesday’s event sought to highlight was making it easier for advertisers to use the platform, including the use of Gen AI to power scripts and voiceovers in the U.S. and Canada.

In November last year, Spotify said 72% of Gen Z listeners viewed the app as the antidote to doom-scrolling, according to findings in its Culture Next Report. The report, aimed at advertisers, indicated Gen Z listeners favored brands that engaged with Spotify by creating playlists or sponsoring live music events. 

Spotify enjoyed a remarkable 2024 turnaround after rounding out 2023 with its largest-ever round of layoffs. The company enjoyed its first full year of profitability and saw its share price more than double last year.

This story was originally featured on Fortune.com



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