Why Europe must pair top-down simplification with bottom-up literacy – and how we can start today
Europe is rightly focused on its competitiveness. Revisiting Mario Draghi’s 2024 report, it is stark about what’s holding our companies back, and it points to a decisive shift: productivity today depends more on the knowledge and skills of our people than on relative labour costs.
But knowledge is not just about AI models, quantum chips or exporting R&D. In Europe – where we lead the world in making rules – regulatory literacy is the iron that is lacking from the foundation. If innovators, founders, researchers, and public buyers don’t understand the rulebook, they won’t scale. If the policy makers cannot communicate the rulebook clearly and consistently, our single market fragments. The decades of challenges with regulatory literacy in the heavily regulated medical device industry, most recently with the MDR & IVDR, is a warning signal for the AI, digital and data industries.
This post is a call to tackle that problem head-on, bottom-up. And it proposes a practical step through regulatory technologies (RegTech) optimised for this particular purpose: make Entries e-tools available free of charge to innovators through Europe’s existing networks, so that regulatory literacy becomes a shared baseline – not a luxury available only to large firms with large compliance budgets.
Three hindrances, a skill gap – and one big opportunity
Draghi highlights three main hindrances from the rising weight of regulation:
- Accumulation of and frequent changes to EU legislation generate overlaps and inconsistencies.
- National transposition and fragmentation add an extra burden.
- SMEs carry a proportionally higher compliance load than large firms.
The report’s wider message is equally clear: competitiveness now hinges on skills and knowledge in the workforce, not on unit labour costs.
Those skills include regulatory know-how. When, according to Draghi, over half of Europe’s SMEs say regulatory obstacles and administrative burden are their single biggest challenge, we are not looking at a marginal issue – we are looking at the baseline condition for growth.
The DIGITALEUROPE trade association echoes the same reality: in AI, data and cyber, overlapping and inconsistent rules drive costs up and scale down, and simplification is the single biggest lever to reignite investment. The European Commission has now committed to cut reporting obligations by ≥25% for large companies and ≥35% for SMEs by 2029 while industry leaders are urging a 50% cut, in line with Draghi’s recommendations.
These are vital steps – yet regulatory simplification alone is not enough unless every innovator can understand and apply the rules confidently and consistently. Regulations continue to be necessary to ensure the safety and key rights of our citizens, and there will be plenty to navigate for all stakeholders also after simplification.
Given the complexity and novelty of Europe’s digital rulebook – AI Act, DSA, DMA, Data Act, data spaces, sectoral regimes – regulatory skills ought to be found from the European Skills Agenda. Without them, innovators lose time in ambiguity and misinterpretations, and scale falls apart. If the safety critical medical device sector falls clearly short in early stage regulatory literacy compared to the well established pharma sector, what chance do the digital and data industries have?
Sandboxes need literacy, not just legal flexibility
Europe has chosen regulatory sandboxes as a core mechanism to make the AI Act and the AI Act landscape legislation work with innovation. By August 2026, each EU Member State must have at least one AI regulatory sandbox and, as defined in the EU’s AI Continent Action Plan, the European Digital Innovation Hubs (EDIHs) are defined as the first contact points to facilitate the access of the SMEs into those sandboxes and to regulatory information in close synergy with the AI Factories ecosystem and Commission’s AI Act Service Desk.
The EUSAiR initiative (EU Regulatory Sandboxes for AI) is an EU-funded programme tasked to outline the sandbox framework from EDIHs to data spaces, Testing and Experimentation Facilities (TEFs) and AI Factories. Their success is key for the competitiveness of Europe because, as recent research warns, if sandboxes proliferate without common methods, Europe risks divergent practices, “sandbox arbitrage,” and – again – non-uniform interpretation of the AI Act.
In short: top-down simplification and structural sandbox capacity are necessary – but they will only deliver at scale if innovators have bottom-up regulatory literacy: shared, practical tools that translate regulations into steps, decisions, and evidence they can act on day one.
The case for a Europe-wide regulatory literacy baseline
A pragmatic way to build that baseline fast, at continental scale, is proposed:
- Put EU rules into concrete, navigable guidance for SMEs: Regulatory text becomes practical when it is restructured into user journeys – “What is my system?” → “Which rules apply?” → “What do I need to demonstrate?” – with detailed references and links to regulations and Commission guidelines, at-hand terminology with clarifications and case examples on compliance with the choice of conformity routes. Here, as EUSAiR suggests in their roadmap, it is crucial that innovators are provided with digital tools that capture the nuances, reduce ambiguity, and bring uniform interpretation of the entire regulatory landscape within their reach. According to our research, Entries is the only tool available that dives that extra mile into the nuances and already contains a handful of tools to cover the AI Act regulatory landscape.
- Embed that guidance in AI sandboxes: Sandboxes are not only a place to test models – they are a place to learn the rulebook together with authorities. A shared nuanced toolset gives SMEs the same “source of truth” in Finland, the Netherlands or Italy; regulators see the same compliance structures; everyone saves cycles.
- Align with the simplification agenda: As the Commission’s Omnibus packages trim regulatory overlaps and reporting, we should channel that clarity directly into the guidance layer SMEs use every day. We can deliver quick wins if the changes are reflected immediately in the “how-to” layer used by innovators, not just in updated legal texts and guidelines. Again, Entries is the only tool available to enable that by capturing the official guidelines, examples, recitals and borderline cases for interpretation.
What Entries can contribute – now
The Entries e-tools are built specifically to turn regulatory frameworks into navigable, step-by-step guidance for innovators. The philosophy is simple: get the baseline right – clear personalized scoping, rule mapping and laying out of the regulatory strategy, and the unique user interface designed for knowledge transfer – so innovators spend their energy on building compliant products, not decoding rules.
Crucially, the Entries tools are designed to:
- Capture nuances & reduce ambiguity (e.g. by guiding users through definitions, scoping and their roles).
- Drive uniform interpretation (shared logic and evidence structures that align with authorities’ expectations).
- Shorten time-to-compliance for SMEs (minute explanation and education to get started from a new solid and level ground of regulatory literacy).
- Scale through the sandboxes (so that an SME in any Member State gets the same practical compass for compliance).
These are examples of feedback on the Entries e-tools collected by our joint action from the AI innovators themselves:
- “The tool is really functional and easy to use!”
- “It helps nicely to understand the effects of the AI Act, as well as what should be taken into account in the development work.”
- “Makes the requirements of the AI Act very concrete.”
- “With Entries you need to think for yourself, instead of only the consultant thinking for you.”
- “If I would’ve had access to the Entries platform two years ago it would have helped me a lot!”
- “Makes learning so easy you cannot get away.”
Given Europe’s policy direction, we see a unique opportunity to continue making these tools freely available to startups and SMEs via the AI regulatory sandboxes with public–private co-funding that matches the Commission’s goals on competitiveness and burden-reduction. With sufficient funding the Entries toolbox is expanded from the existing five e-tools on the AI Act, Data Act, EHDS Regulation, MDR and IVDR to cover the entire regulatory landscape for AI and data: from the GDPR to NIS2, DSA and Radio Equipment Directive by August 2026 to a complete open-source toolbox within two years. Meanwhile, AI is adopted to ensure the scalability of the toolbox into national transpositions of EU legislation and beyond.
Europe can move fast on this
Where do we stand and why should we haste?
- The policy narrative is aligned: Draghi’s report calls for coordinated action, less fragmentation and a practical focus on quick, high-impact proposals per sector, and the Executive Vice-President for Tech Sovereignty, Security and Democracy, Henna Virkkunen, has said: “We want an innovation-friendly rulebook: both in the way we apply the rules, and in simplifying the laws where our objectives can be reached at lower costs and streamlined procedures.”
- The industry voice is aligned: CEOs and associations with DIGITALEUROPE in their front line ask for simplification, legal clarity and immediate burden relief for SMEs.
- Sandboxes are being set up: EUSAiR is producing frameworks and pilots and Member States are on the clock for August 2026.
But none of that will deliver at scale unless we also invest in the bottom-up literacy layer – the everyday, practical translation of regulations into decisions and action points for the teams who build. That is where a free, nuanced and shared tooling layer can change the slope of the curve for thousands of SMEs in Europe.
Call to action
- European Commission & EU Member States: pair the Omnibus simplification drive with a Regulatory Literacy Baseline for SMEs – delivered through AI sandboxes – so that regulatory changes become actionable overnight.
- EDIHs & Sandbox operators: pilot the common guidance layer applying Entries tools across your hubs by March 2026; measure consistency and user satisfaction.
- Universities, research centers & clusters: give spin-outs and research teams the same baseline by handing them the Entries e-tools; let’s turn more of Europe’s innovations into market outcomes.
- Industry & investors: co-fund open access to these Entries tools – because regulatory literacy lowers the risk of co-innovation, accelerates diligence, and scales portfolios.
Since Europe is serious about winning in AI and critical technologies while staying true to our values, we must ramp up regulatory skills across Europe and make regulatory literacy a public good. Let’s add that iron to get the foundation right – for everyone – and the rest of the competitiveness agenda will stand firm.
For further information and requests, please contact any of the steering committee member of the joint action:
- Tiina Vainio, The Finnish Innovation Fund Sitra, , +358 50 524 6559
- Laura Halenius, The Finnish Innovation Fund Sitra, , +358 294 618 303 (Steering Committee Chair)
- Ville Peltola, Technology Industries of Finland and AI Finland network, , +358 40 553 9941
- Päivi Ahlgren, Healthtech Finland, , +358 40 193 7953
- Karen Lindegaard, Danish Life Science Cluster, , +45 2461 1931
- Ilona Raitakari, HealthHub Finland, European Digital Innovation Hub (EDIH), , +358 40 124 4956
- Teemu Moilanen, Finnish AI Region (FAIR), European Digital Innovation Hub (EDIH), , +358 40 510 7317
- Youssef Zad, Finnish Startup Community, , +358 40 593 3316
- Heikki Pitkänen, Lean Entries, , +358 44 238 0006
- Outi Tuovila, Business Finland, , +358 50 339 2542 (Monitoring Member)
