Study on the next data frontier: Generative AI, regulatory compliance and international dimensions

This study, commissioned by the Directorate-General for Communications Networks, Content and Technology (DG CNECT) of the European Commission, examines three dimensions of the European data economy: data needs for innovation, automated data reporting for regulatory compliance, and international aspects. The analysis draws on desk research, stakeholder interviews, surveys, and comparative studies, supported by academic and policy literature and industry insights. Task 1 explores Europe’s Generative AI ecosystem, which shows strong research output but lags behind the US and China in foundational model development and investment. Access to high-quality, multilingual, and domain-specific datasets is identified as a critical bottleneck. Legal and technical barriers, particularly for SMEs, persist. The report calls for interoperable data spaces, targeted public investment, and clearer regulatory guidance to foster competitiveness and inclusivity. Task 2 assesses automated data reporting across agriculture, automotive, healthcare, chemicals, and energy. Adoption remains uneven, with manual methods still dominant among SMEs. Barriers include high costs, skill gaps, and fragmented regulatory frameworks. Recommendations focus on interoperable infrastructure, harmonised standards, and digital skills development, alongside public-private partnerships and regulatory flexibility to ensure inclusive transformation. Task 3 maps and analyses 8 targeted third countries, offering a comparative assessment of data practices, identifying key trends and evaluating the extent of convergence with EU regulations. Task 3 also describes, and analyses six use cases identified as potential opportunities for international data sharing. The EU is recommended to pursue a model that achieves a genuine balance between protecting data and fostering innovation. To achieve this, five key pillars should be in focus: Leverage regulatory gravity to export EU data space architecture; Pioneer new governance models to solve trust deficits; Transform friction into partnership through proactive engagement; Prioritise Privacy Enhancing Technologies to future-proof security cooperation; Scale and structure R&D funding for AI and data space