European Union flags flutter outside the EU Commission headquarters in Brussels, Belgium, on February 1, 2023 (Yves Herman | Reuters).
When Gerard de Graaf relocated from Europe to San Francisco almost a year ago, he found that his job had a completely different vibe. As a 30-year veteran of the European Commission, de Graaf was assigned the task of rejuvenating the EU office in the Bay Area. His role as senior envoy for digital to the U.S. focused on assisting the tech industry in preparing for the upcoming legislation, The Digital Services Act (DSA), which takes effect on Friday.
Upon his arrival, the hype around the metaverse had surpassed artificial intelligence in Silicon Valley. Tech giants and emerging startups were announcing massive layoffs, and the Nasdaq was on track for its worst year since the 2008 financial crisis.
Among de Graaf’s responsibilities was ensuring that companies like Meta, Google, Apple, and Amazon were ready for the DSA, which draws inspiration from banking regulations. Failure to comply with the act, introduced by the European Commission in 2020 to combat the spread of illegal content online and promote accountability, could result in fines of up to 6% of annual revenue.
As an envoy, de Graaf experienced more than he bargained for. In March, the iconic Silicon Valley Bank collapsed, marking the second-largest bank failure in U.S. history. Concurrently, OpenAI’s ChatGPT service triggered an arms race in generative AI, with substantial investments flowing into new chatbots and the large language models (LLMs) behind them.
Reflecting on the past year, de Graaf acknowledges that it has been “strange in many, many ways.” His office, situated on the 23rd floor of a building in downtown San Francisco alongside the Irish Consulate, serves as the first formal European Union presence in Silicon Valley since the 1990s.
De Graaf dedicated a significant portion of his time to meeting top executives, policy teams, and technologists at major tech companies to discuss regulations, the impact of generative AI, and competition. Although enforcement of regulations falls under the jurisdiction of the European Commission in Brussels, the new outpost has proven instrumental in fostering improved relations between the U.S. tech sector and the European Union.
According to de Graaf, there was a crucial conversation that needed to be had but hadn’t taken place until now. Amusingly, he adds that someone with “infinite wisdom” decided that the European Union should step back from the region during the internet boom, precisely when Silicon Valley was flourishing.
At the time, the prevailing belief within the tech industry was that policymakers lacked the understanding and ability to regulate the rapidly evolving internet. However, de Graaf suggests that major tech leaders are now giving the DSA the attention it deserves. For example, Meta CEO Mark Zuckerberg met with EU Commissioner Thierry Breton to discuss the specifics of the rules, and Elon Musk, owner of X (formerly known as Twitter), publicly supported the DSA after meeting with Breton.
De Graaf asserts that there is now “a bit more respect and understanding” for the European Union’s position, particularly after the advent of generative AI.
X had previously withdrawn from the EU’s voluntary guidelines for countering disinformation. However, X now must comply with the DSA, and Breton emphasized that “fighting disinformation will be a legal obligation.”
De Graaf states that “we’ve seen a serious commitment” from major companies in Europe and worldwide to prepare for and comply with the new regulations.
The DSA requires platforms with over 45 million monthly active users in the EU to establish risk assessment and mitigation plans. Additionally, they must allow certain researchers to access their services to inspect potential harms and provide enhanced transparency to users about their recommendation systems, including the ability to adjust settings.
Timing may pose a challenge, as many companies have executed cost-cutting measures resulting in layoffs within their trust and safety teams earlier this year. De Graaf questions whether these companies still have the capacity to implement the new regulations. However, many have assured him that layoffs have bolstered their commitment to trust and safety.
De Graaf clarifies that the DSA does not mandate a specific number of trust and safety personnel for tech companies; rather, compliance with the law is the primary requirement. Nevertheless, he admits that he received an unsatisfactory answer from one social media platform regarding its ability to monitor disinformation during upcoming elections in Poland, as the company only has one person in the region.
To address this issue, the DSA emphasizes transparency in the actions of these platforms. De Graaf explains that there is still much unknown regarding how companies moderate content and make decisions about what stays and what gets taken down.
A native of the Netherlands and a father of two, de Graaf has spent the past three decades deeply involved in regulatory issues for the European Commission. He has previously worked on the Digital Services Act and Digital Markets Act, European legislation designed to protect consumers’ rights, enhance competition, and regulate digital markets.
This is not de Graaf’s first experience in the United States. From 1997 to 2001, he served as a trade counseller at the European Commission’s Delegation to the United States in Washington, D.C.
Despite the discussions around San Francisco’s “doom loop,” de Graaf observes a different level of energy in the city and throughout Silicon Valley. He finds it to be a dynamic environment filled with intriguing individuals who offer different perspectives, making his conversations with them truly rewarding.
The rise of generative AI has been a prominent topic of discussion since de Graaf’s arrival last September. Major tech companies and top executives have called for regulations due to the technology’s potential impact on society and the economy. While the European Parliament has made progress in passing the EU AI Act, which represents the EU’s AI regulations, it still has a long way to go before becoming law.
De Graaf finds it ironic that tech companies, which previously criticized the EU for its aggressive regulations, are now asking why it is taking so long to regulate generative AI. He estimates that an agreement on the text will hopefully be reached by the end of the year, followed by a transitional period of about two years to allow the industry and regulators to adapt.
The ever-evolving nature of generative AI poses challenges for the EU in formulating regulations swiftly. Initially, the concern was regulating a few dominant companies with vast resources. However, as more powerful LLMs become widely accessible for free, the technology spreads, making regulation more complex as it moves beyond a select few major companies. De Graaf has been engaging with local universities, such as Stanford, to gain insight into LLM transparency, researchers’ access to the technology, and the ethics surrounding its use.
In conclusion, Gerard de Graaf’s role as senior envoy for digital to the U.S. has provided a platform for the European Union to engage with the tech industry in Silicon Valley. His focus on helping companies prepare for the Digital Services Act and navigate the challenges of generative AI has sparked conversations and improved understanding between the European Union and the U.S. tech sector. While the regulatory landscape continues to evolve, de Graaf remains committed to fostering transparent and collaborative relationships in the digital realm.
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