Could the EU Kids Act unwittingly widen the transatlantic AI divide?
Europe must prepare for the potential consequences of implementing further digital rules that could make it more difficult for smaller European developers to compete, warns an industry insider.
Brussels wants to shield children from Big Tech. It may end up handing Silicon Valley an even bigger competitive edge.
The EU Kids Act, unveiled this week, promises age limits, parental controls and a crackdown on the "addictive" features baked into social media, video platforms and AI chatbots alike.
But as the bloc moves to police the tech giants, a harder question looms: can Europe regulate its way to child safety without regulating itself out of the AI race it is already losing?
The stakes could hardly be higher. Europe has just one significant AI company to speak of, Mistral, dwarfed by its US rivals OpenAI and Anthropic in both valuation and investment.
The bloc has never really left the starting blocks when it comes to scaling digital platforms to rival America's, relying instead on the strength of its single market and its power to regulate.
Now, as AI becomes the defining technology of the decade, that trade-off — rules versus growth — is seen as a "make or break" moment for the bloc.
What the Kids Act actually proposes
The legislation includes a number of measures aimed at protecting children online, including age restrictions, parental controls and limits on potentially addictive features.
The proposals have been welcomed by some in the tech industry, but Stanislas Marchand, a former mobile gaming lead at French unicorn Voodoo, says Europe must also consider the potential consequences for its own digital sector.
He argues that Europe "must prepare for the potential consequences by investing more urgently than ever in its homegrown AI capabilities".
The European Commission's proposals come amid growing pressure on governments to protect children from the risks posed by social media and other online platforms.
In the last couple of years, though, Big Tech has come under increasing scrutiny for its failure to protect children online, from cyberbullying, harassment and grooming to exploitation, extortion and misinformation.
Australia famously implemented the world's first social media ban for under-16s in December last year, a move that was watched keenly by governments around the world, prompting many to follow suit in implementing their own bans or exploring the possibility of doing so.
France, Greece, Austria, Denmark, Spain, Belgium, Italy, Germany, Poland and the Netherlands have all been considering or advancing national legislation on social media bans, piling pressure on Brussels to present an EU-wide measure and avoid fragmentation.
Meanwhile in the US this year, social media companies have faced and lost landmark liability cases, with many choosing to settle instead — such as Meta's recent $17bn (€14.9bn) deal to end a lawsuit brought by 47 US states.
Beyond social media
The EU Kids Act calls for a total, blanket social media ban for under-13s, while those up to 15 years old would be able to make "mini accounts" — limited, highly supervised profiles linked to a parent's profile.
Not only that, these accounts would also come with mandatory one-hour daily limits and a complete ban on "toxic or addictive features" like infinite scroll, endless autoplay and engagement rewards.
Marchand welcomed the proposed ban for under-13s, but said the proposal "should have been extended to everyone under 16" rather than permitting mini accounts for teens.
He argues the message from the Commission should have been that the platforms in question are "unsuitable for children" because they are "engineered to maximise attention".
The Kids Act goes well beyond social media.
It encompasses video-sharing platforms such as YouTube and Twitch, online video games like Roblox, Fortnite and Minecraft, and more recent entrants like AI chatbots and companions such as ChatGPT, Claude and Gemini.
It would also require app stores and operating systems to integrate strict age-assurance filters to prevent underage users from downloading restricted apps and software in the first place.
And implementation, for Marchand, is where the problem lies, because the EU is asking platforms to "verify children's ages, operate parent-controlled accounts, enforce daily limits, restrict contacts and features, and prove that the resulting product is safe."
These requirements altogether could increase the cost and complexity of launching a product in Europe.
"Every one of those responsibilities creates another potential point of failure, and history gives us little reason to trust social media companies to execute them properly."
That concern is particularly relevant given that Europe's digital sector is dominated by American firms, and the continent has somewhat failed to make sure Big Tech follows the rules.
Meta has been fined twice for illegally transferring European user data to US servers, breaching GDPR in 2023 and the Digital Markets Act in 2025.
TikTok was fined €530m last year for failing to protect children's data and illegally transferring it to Chinese servers.
Elon Musk's X, which has had the most acrimonious relationship with EU lawmakers, was fined €120m last December over its deceptive "blue checkmark" verification and for denying researchers access to data.
Google, too, has been fined repeatedly for breaching antitrust rules, amounting to €10.38bn so far.
A patchy enforcement record
All of these fines are pocket change for Big Tech, and with the arrival of potentially even larger firms in the shape of AI giants OpenAI and Anthropic — again based in the US — it could become even more difficult for Europe to shape and enforce its own digital rules.
Marchand fears the Act could also make the EU a less attractive market to launch new products, while doing little to support European alternatives.
"If the Kids Act requires separate European products and costly ongoing assessments, US labs may delay launches here while smaller European developers struggle to compete," he warns.
He also points out that frontier AI companies already face enormous computing costs and uncertain paths to profitability, while some advanced Anthropic models have already been restricted outside the US and withheld from the UK's AI Security Institute.
For Marchand, the result could be an unintended consequence of the EU's attempt to protect children online.
"My feeling is this will further add to the transatlantic AI divide."
