Meta Stock Price Dips Below $700 – Firm To Refuse EU’s AI code of Practice?

Meta's stock (META) has dipped below $700 today, down 0.66% in early trading, as the level once again proves tricky to hold for bulls. The most pressing interesting news on the day is Meta's refusal to sign the European Union's AI Code of Practice, a move that has ignited debate and raised questions about the company's long-term strategy in the European market.

Joel Kaplan, Meta's Chief Global Affairs Officer, articulated the company's position in a recent LinkedIn post, stating that the EU is “heading down the wrong path on AI.” Kaplan argues that the Code of Practice introduces legal uncertainties and exceeds the scope of the AI Act, ultimately hindering the development and deployment of AI models in Europe. This stance aligns Meta with a growing chorus of European businesses, including giants like Bosch, Siemens, and Airbus, who have voiced similar concerns about regulatory overreach stifling innovation.

Meta Rejects EU's AI Code of Practice

Joel Kaplan, Meta's chief global affairs officer, announced that Meta will not sign the European Union's AI code of practice, citing “legal uncertainties” and concerns that the regulations go beyond the scope of the AI Act. Kaplan stated that such regulations could “throttle the development and deployment of frontier AI models in Europe.”

This decision aligns with concerns from 44 of Europe's largest businesses, including Bosch, Siemens, SAP, Airbus, and BNP, who have called for the European Commission to “Stop the Clock” on implementation of these regulations.

The decision comes at a crucial time for Meta. The company has been aggressively investing in AI, integrating it into everything from its core social media platforms to its metaverse ambitions. Access to talent and data within the EU is vital for training and refining these models. By refusing to sign the Code, Meta risks alienating European regulators and potentially facing restrictions on its AI operations within the region.

The core of Meta's argument rests on the belief that the EU's regulations are overly burdensome and will stifle innovation. The company fears that the Code of Practice will create a complex and unpredictable legal environment, making it difficult to develop and deploy AI models in Europe. Meta also suggests that these regulations could disproportionately impact smaller AI developers, hindering competition and consolidating power in the hands of a few large players.

However, Meta's decision also carries significant risks. The EU is a major market for Meta, and a contentious relationship with regulators could have tangible financial consequences. The EU has a history of imposing hefty fines on tech companies for non-compliance with its regulations. Furthermore, a negative perception of Meta's commitment to responsible AI development could damage its reputation and erode user trust.