The European Union is setting off on a warpath against artificial intelligence and the data centers that power it. For a bloc that has yet to produce a single frontier AI model, the campaign underscores just how much more Europe values regulation than innovation. 

Americans should take note. Whatever its stated justification, regulation becomes destructive when government control of industry takes precedence over innovation. The outcome is almost inevitable: a society that stifles its own creativity, slows economic growth, and ultimately diminishes its people’s well-being.

Europe’s approach to AI and data centers will make that tradeoff increasingly difficult to ignore. A continent already trailing the United States and China in frontier AI cannot regulate its way into technological leadership.

The EU says it wants to close the widening AI gap with the United States and China. Yet instead of making it easier to raise capital, build infrastructure, and take risks, Brussels is adding a massive layer of paperwork and oversight to one of the world’s most capital-intensive and fast-moving industries.

Under the EU AI Act, providers of general-purpose AI models must produce and maintain technical documentation, including disclosures about a model’s energy consumption or estimates based on the computing power used to develop it. Separately, the EU’s Energy Efficiency Directive requires data centers with at least 500 kilowatts of capacity to annually report an expanding list of operational and sustainability metrics: energy use, power utilization, water consumption, renewable-power sourcing, temperature settings, and waste-heat reuse. 

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The European Commission is now proposing a common rating system that would add still more disclosures, requiring qualifying data centers to document energy and water efficiency, local water-stress conditions, and their capacity to reuse waste heat. No direct limit on energy or water consumption has been imposed — yet — but the direction is unmistakable. 

The more visibility government gains into an industry, the greater its ability, and incentive, to control it. What begins as a request for information rarely remains just that. Regulators are bound to use the collected information to create standards, rankings, and benchmarks. Eventually, those benchmarks become the justification for mandates, restrictions, penalties, and state-directed investment. That is how a regulatory regime begins to resemble a command-style economy.

Yet despite Europe’s warning, a bipartisan consensus in the United States is moving in the same direction: AI “kill switches,” bans on systems more capable than humans, development moratoriums, job-protection mandates, pauses on data-center construction, and more. Why should America follow the same path as a continent that has steadily surrendered its economic frontier? Why would a country that leads the world in technological innovation decide that its answer to uncertainty is to make innovation harder, slower, and more expensive? Whatever one thinks of AI, Europe’s approach is plainly not the answer.

America’s problems require American solutions, not renewed and misplaced faith in command-economics. That means confronting AI’s real risks without abandoning the free-market system that made American technological leadership possible in the first place: the very system Europe has increasingly discarded, and for which it is now paying the price.