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Mounting Industry Pressure Pushes EU to Rethink AI Act Timeline
The European Union's Artificial Intelligence Act, heralded as the world’s most comprehensive attempt to regulate AI technologies, is now the subject of rising dissent from some of the continent’s most influential startup founders and investors. In a coordinated pushback, over 30 entrepreneurs and venture capital leaders have signed an open letter urging EU member states to pause the rollout of the legislation, citing significant risks to innovation, investment, and competitiveness.
The exclusive letter, published by Sifted, was drafted by Johannes Schildt, the founder and former CEO of Swedish healthtech company Kry. He was prompted to act following Swedish Prime Minister Ulf Kristersson’s public demand that the EU freeze enforcement plans over concerns it would stifle technological progress.
Schildt’s initiative quickly gained traction among Europe’s startup elite, drawing signatures from the likes of 20VC founder Harry Stebbings, Voi CEO Fredrik Hjelm, Synthesia COO Steffen Tjerrild, and numerous founders across fintech, healthtech, and AI sectors. The letter has amplified ongoing concerns that the Act, while well-intentioned, is being rushed into enforcement without the necessary clarity or infrastructure.
Regulatory Uncertainty in a Critical Moment for AI Innovation
At the core of the complaint is timing. While the AI Act technically came into force in 2024, its staggered implementation is due to stretch over two years. However, one of the most vital components—the Code of Practice on General-Purpose AI Models—remains unfinished. A final draft is expected to be presented this week, just as enforcement looms.
Startups warn that pushing forward with incomplete frameworks will leave companies vulnerable to inconsistent national interpretations, creating regulatory fragmentation within the single market. This patchwork enforcement could introduce legal uncertainty and compliance burdens that disproportionately affect smaller players.
Concerns Extend Across Europe’s Startup Ecosystem
The letter’s signatories represent a cross-section of Europe’s high-growth sectors—from cybersecurity to media, climate tech to digital finance. Several expressed fears that a premature enforcement of the Act could lead to consolidation, where only well-capitalized incumbents can afford the compliance costs.
This sentiment was echoed by a range of executives who worry that, absent a coherent implementation strategy, the EU risks undermining the very ecosystem it aims to protect and develop.
Calls for Strategic Delay, Not Abandonment
The call for a “stop the clock” approach is not, as Schildt and others assert, a push to dismantle the legislation. Rather, it’s a plea for deliberation and precision. The signatories argue that without a clear regulatory framework, startups will find themselves navigating a thicket of inconsistent rules, hampering both day-to-day operations and long-term planning.
Supporters of the pause note that competitors in the U.S., UK, and Asia operate under more flexible and predictable frameworks, giving them an advantage in attracting talent, investment, and market share. The fear is that Europe’s AI ecosystem—still in its formative stages—may lose momentum or even begin to erode if the Act is rolled out without adequate planning.
The signatories include founders from well-known fintech and tech companies such as Deel, Better Stack, Karma, Codesphere, and TomTom. Their collective concern points to a broader anxiety within the ecosystem that the EU’s ambition to lead in AI regulation could come at the cost of global competitiveness.
What Happens Next?
With the draft Code of Practice expected imminently and enforcement measures set to take effect within weeks, the window for action is narrowing. Whether the EU will heed the calls for a pause remains unclear. So far, only Sweden has publicly urged such a delay, though industry voices suggest that other member states may be quietly sympathetic.
Behind the scenes, negotiators continue to work toward consensus on how to apply the Act, particularly to general-purpose AI systems like large language models. But until a clear roadmap is finalized, the divide between policymakers and the innovation community appears to be widening.
As Schildt’s letter gains visibility and support, the EU faces a high-stakes decision: press ahead with an incomplete structure, or listen to the collective warning from the very companies it hopes to regulate into global leadership.
Europe’s Reputation in the Balance
The timing of this dispute is no small matter. AI development is moving at a breakneck pace globally. In regions where regulation has been more cautious or adaptive, startups have thrived, pushing the frontiers of AI applications across sectors—including fintech.
If the EU stumbles in this moment—either through overreach or miscalculated urgency—it risks cementing its role not as a leader, but as a regulator watching innovation move elsewhere. The calls from founders, CEOs, and investors may reflect frustration, but they also offer a clear path forward: pause, recalibrate, and get it right.
Europe's AI future may depend on whether that message is heard.
