The European Union has denied that its recent decision to abandon the AI Liability Directive was influenced by pressure from the Trump administration to deregulate the AI industry. The directive, proposed in 2022, aimed to make it easier for consumers to sue over harms caused by AI-enabled products and services.

According to Henna Virkkunen, the EU's digital chief, the decision to scrap the directive was made to focus on boosting competitiveness by reducing bureaucracy and red tape. In an interview with the Financial Times, Virkkunen emphasized that the EU's priority is to create a more business-friendly environment, which would, in turn, drive innovation and growth.

The EU's AI Act, which is still in the works, will include a code of practice on AI that limits reporting requirements to what's already included in existing AI rules. This move is seen as a significant shift in the EU's approach to regulating AI, with some critics arguing that it may compromise consumer protection.

The timing of the EU's announcement has raised eyebrows, coming just a day after US Vice President JD Vance urged European legislators to rethink their approach to technology rule-making. Vance's speech at the Paris AI Action Summit emphasized the need for the EU to join the US in embracing the "AI opportunity" and avoiding overly restrictive regulations.

Despite the EU's denial of US pressure, the coincidence has sparked speculation about the extent of American influence on the EU's AI policy. The Commission's 2025 work program, published on the same day as Vance's speech, touted a "bolder, simpler, faster" Union, with plans to stimulate regional AI development and adoption.

The implications of the EU's decision are far-reaching, with potential consequences for consumer protection, innovation, and the global AI landscape. As the EU and US continue to navigate the complexities of AI regulation, it remains to be seen whether this shift in approach will have a lasting impact on the industry.

Industry experts are already weighing in on the decision, with some arguing that the EU's move may create a more favorable environment for AI startups and innovation. Others, however, are concerned that the lack of robust regulation may expose consumers to unnecessary risks.

As the EU and US continue to shape their AI policies, one thing is clear: the stakes are high, and the consequences of these decisions will be felt for years to come. The EU's denial of US pressure may be just the beginning of a larger conversation about the role of regulation in the AI industry.