EU’s ‘AI Act’ and Europe’s Data Center Boom

European Union officials have reached a provisional agreement on the proposal on harmonised rules on artificial intelligence (AI), the ‘artificial intelligence act’. The draft regulation aims to ensure that AI systems placed on the European market and used in the EU are safe and respect fundamental rights and EU values. This landmark proposal also aims to stimulate investment and innovation on AI in Europe.

The proposals include safeguards on the use of AI within the EU as well as limitations on its adoption by law enforcement agencies. Consumers would have the right to launch complaints and fines could be imposed for violations.

EU Commissioner Thierry Breton described the plans as “historic”, saying it set “clear rules for the use of AI”.

He added it was “much more than a rulebook – it’s a launch pad for EU start-ups and researchers to lead the global AI race”.

European Commission President Ursula von der Leyen said the AI Act would help the development of technology that does not threaten people’s safety and rights.

The European Union’s push for AI regulations coincides with a momentous surge in data center capacity across Europe.

According to a recent report from real estate and investment management service provider Jones Lang LaSalle (JLL), the first half of 2023 saw the single busiest two quarters for data center investments in Europe on record. The report highlights a 114MW capacity take-up recorded in the second quarter of 2023, which is more than double the 51MW take-up seen in the first quarter and the largest second quarter to date.

The driving force behind this surge in data center capacity in Europe lies in the exponential growth of data-driven technologies, cloud computing, IoT (Internet of Things), and the impending integration of artificial intelligence. These advancements necessitate robust, high-capacity data centers capable of accommodating and processing massive volumes of data while ensuring efficiency, reliability, and security. Moreover, the increasing shift towards digitalization across industries, coupled with regulatory frameworks mandating data localization and privacy standards, has spurred the need for geographically distributed and compliant data center facilities across the European landscape.

The European Parliament defines AI as software that can “for a given set of human-defined objectives, generate outputs such as content, predictions, recommendations or decisions influencing the environments they interact with”. ChatGPT and DALL-E are examples of what is called “generative” AI. These programs learn from vast quantities of data, such as online text and images, to generate new content which feels like it has been made by a human.

AI model training applications require high computing power levels which are fundamentally different compared to traditional data centers. These algorithm-driven machines rely heavily on GPU chips over CPUs, particularly favoring “hyperscale” GPUs that necessitate liquid cooling systems instead of traditional air cooling. The shift towards AI is driving significant changes in how data centers are designed and planned.

Private equity firms are poised to inject billions into the burgeoning data center construction sector. Despite the remarkable growth observed in Europe’s data center market, several uncertainties persist, necessitating in-depth exploration.

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