Critics say the EU's current AI rules are too complicated and contradictory. (Credit: agsandrew/Adobe Stock)

(Bloomberg) — The European Union is preparing to streamline its privacy rulebooks in a bid to bolster the competitiveness of local technology and artificial intelligence companies, according to a package the bloc will unveil on Nov. 19.

The EU’s executive branch, the European Commission, is planning to propose a “digital omnibus” draft law that simplifies its data protection regulations and the AI Act, according to documents seen by Bloomberg News. The official in charge of the commission’s tech policy, Henna Virkkunen, has called for less red tape to encourage the sector to grow.

The proposed changes come as European and American tech companies, the Trump administration and even members of the bloc have criticized EU regulations for being over-reaching and poorly defined. Some Silicon Valley giants, including Apple Inc. and Meta Platforms Inc., have withheld products citing burdensome regulation. Critics say the AI rules are too complicated and contradictory, raising fears that Europe will fall further behind the US and China in the emerging technology.

The draft seeks to make it easier for companies to train AI models on EU residents’ personal data, including measures to let the firms process sensitive data such as ethnicity or religion to ensure that biases are spotted and minimized.

The definition of what constitutes personal data under EU law is also narrowed in the draft, and in some cases would exclude data that has been made pseudonymous and is harder to a link to a specific person.

Commission spokesman Thomas Regnier didn’t immediately respond to a request for comment.

Regnier addressed the draft law in a press conference on Friday. “The possibility we have with the omnibus is to listen to concerns of our industry, to follow up with different actions we have taken since the beginning of the mandate to reduce administrative burdens on our companies and our startups,” he said.

Some privacy activists are opposing the measures. The potential changes are “not just extreme, but also very poorly drafted,” Austrian lawyer Max Schrems, who has campaigned against privacy violations, said in a statement after reviewing the draft. “It is not helping ‘small business,’ as promised, but again mainly benefiting ‘big tech.’”

Some provisions of the AI Act are already in effect, and requirements for so-called high-risk AI systems are set to come into force next August.

Industry groups and European tech companies have lobbied the commission to freeze implementing rules for high-risk AI systems until it adopts standards about how to apply such rules. There hasn’t been a decision to postpone the implementation of these parts to date.

The draft law features a placeholder “for measure[s] still under consideration” on “aligning the implementation timelines.” It also includes a one-year grace period for providers of generative AI products that are already on the market in order to allow for the inclusion of watermarking labels that clearly identify AI-generated audiovisual material.

The proposed overhaul will need the backing of the European Parliament’s lawmakers and the EU’s member states to be passed into law.

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