The EU Needs to Reform the GDPR To Remain Competitive in the Algorithmic Economy

Abstract: AI promises significant social and economic benefits. However, those benefits can be diminished by poor regulations, especially those related to data processing, as data lies at the heart of AI. In particular, the GDPR, while establishing a needed EU-wide privacy framework, will unfortunately inhibit the development and use of AI in Europe, putting firms in the EU at a competitive disadvantage to their North American and Asian competitors. If the EU wants to thrive in the algorithmic economy, it needs to reform the GDPR, such as by expanding authorized uses of AI in the public interest, allowing repurposing of data that poses only minimal risk, not penalizing automated decision-making, permitting basic explanations of automated decisions, and making fines proportional to harm.