Synthesia's policy chief has warned that the EU's push for tech sovereignty will backfire, harming the bloc's own startups. Speaking ahead of the debate on Article 74, the chief argued that new regulations will drive up costs and push European AI firms toward consolidation rather than innovation. The company, valued at roughly $5 billion, says the compliance burden is already reshaping investor appetite.

Article 74 proposes rules that would require European tech firms to meet strict localization and data requirements. Smaller AI companies — from Synthesia to Mistral — lack the resources to comply without absorbing heavy costs. The policy chief said these rules effectively create a two-tier system where only the largest players can operate, squeezing out the startups that policymakers claim to protect.

The warning comes as EU regulators draft rules meant to keep AI development domestic. Synthesia's concern reflects a broader tension: building European tech power through regulation risks pricing out the very companies that could compete with US and Chinese giants.