EU to water down AI law after pressure from US

Good morning, happy Friday and welcome back to FirstFT. In today’s newsletter:

• EU proposes pausing parts of its digital legislation

• Elon Musk’s $1tn pay victory

• Why venture capital could be at a turning point

• The HTSI 2025 gift guide

We start today with an exclusive story on how the European Commission is proposing to water down its landmark artificial intelligence law, following pressure from Big Tech companies and the US government.

Here’s what we know: The EU is set to pause part of its AI act and simplify other digital regulations, a senior EU official told the Financial Times, after “engaging” with the Trump administration. While the legislation entered into force in August last year, many of its provisions only come into effect in coming years. The act is considered the world’s strictest regime regulating the development of the fast-developing technology and details of the so-called simplification package will be released on November 19.

Why it matters: The draft proposal comes amid a broader debate over how aggressively the bloc should enforce its digital rules in the face of a fierce backlash from Big Tech companies supported by US President Donald Trump. A number of US companies, including Facebook and Instagram owner Meta, have warned that the EU’s approach to regulating AI risks cutting the continent off from accessing cutting-edge services. The move also reflects EU efforts to make the bloc more competitive against the US and China. Read more on the proposals.

Here’s what else we’re keeping tabs on today and over the weekend:

• Stock markets: Futures contracts suggest US stocks will open higher after a fresh bout of selling yesterday following the release of a weak private-sector jobs report.

• Fed speak: Federal Reserve Bank of New York governor John Williams and Federal Reserve vice-chair Philip Jefferson speak at public events. Trump appointee Stephen Miran also speaks at an event in New York dedicated to stablecoins.

• Results: Brazilian state-run oil company Petrobras is to hold calls with investors and the press to present third-quarter results. Franklin Resources reports full-year results.

• International relations: Viktor Orbán is set to meet Donald Trump at the White House today, and leaders of Latin American, Caribbean and EU member states meet on Sunday in Colombia for two days of talks to deepen ties.

How well did you keep up with the news this week? Take our quiz.

Five more top stories

1. China’s exports have declined for the first time since the US unleashed its “liberation day” tariffs in April. Exports from the world’s second-biggest economy were down 1.1 per cent year on year in dollar terms in October, China customs data showed today. The unexpected decline comes after months of strong export growth.

2. Tesla: 75 per cent of shareholders backed proposals for Elon Musk to receive a $1tn pay award if ambitious targets are met. At the annual shareholder meeting in Texas on Thursday, Musk spoke for more than an hour and outlined his vision for a future filled with AI and an “army” of Tesla robots. Read more on the event and watch Musk dancing with robots.

3. Three of the US’s biggest airlines have announced hundreds of flight cancellations from today as the federal aviation regulator prepares to throttle capacity at dozens of American airports. The cancellations will affect domestic flights while international routes will be spared from the cuts. Here’s more detail on which airports will be affected.

4. Global divisions over the future of fossil fuels were laid bare at a diminished leaders’ summit on the eve of the UN COP30 summit in Brazil. Less than half the number of leaders that attended last year’s COP were at the event in the Amazonian city of Belém ahead of the start of formal talks next week. The FT will be hosting events throughout COP30. Here’s a full list of the events.

5. The US and other mediators are pressing Israel to grant safe passage to about 150 Hamas militants trapped underground in an Israeli-controlled part of Gaza, in exchange for them giving up their weapons. The fate of the militants has emerged as a crucial issue in ceasefire talks.

Today’s Big Read

The day after US Republicans suffered brutal setbacks in local and state elections, Donald Trump put on a brave face in a speech to business executives and investors. He touted record highs in the US stock market, solid growth, and the proliferation of “AI buildings” popping up across the country. Trump’s bravado, however, belies the pressure he is under to respond to affordability questions. Can he use policy levers to bring prices down?

We’re also reading. . . 

• Metsera merger: Novo Nordisk has challenged Pfizer to raise its offer for the obesity start-up, as the Danish drugmaker again bested its US rival’s bid.

• AI bubble: The latest bout of tech exuberance is a reminder that market manias are also about leverage, liquidity and lunacy, writes Gillian Tett.

• Green cash: The COP30 climate summit has rekindled Stuart Kirk’s excitement about the prospects for emerging companies.

• Venture capital: Sequoia’s shake-up may be a VC turning point, argues Richard Waters.

Chart of the day

Market participants are worried about strains in a vital section of the financial system’s plumbing. The difference between a key market-based rate known as tri-party repo and one set by the Federal Reserve hit its highest level since 2020 last Friday and Wall Street banks have warned funding pressures could lead to short-term interest rates bursting higher again.

Take a break from the news . . . 

With the holiday season rapidly approaching, HTSI launches its 2025 gift guide. There are hundreds of ideas and items for every type — from gardeners to those that love a dash of granny chic. There’s even an Aston Martin for the middle-aged male in your life.