EU delays tech sovereignty package with AI and Chips Act 2

The European Commission has delayed a flagship tech sovereignty package for the second time, according to its latest College agenda. The measures are now scheduled for adoption on 27 May, after previously being postponed from March to April.

The tech sovereignty package includes several major initiatives aimed at strengthening EU tech sovereignty, such as the Cloud and AI Development Act, the Chips Act 2, an open-source strategy, and a roadmap for digitalisation and AI in energy. European Commission officials have not provided a reason for the latest delay.

The Cloud and AI Development Act is expected to define what constitutes a ‘sovereign’ cloud and simplify rules for building data centres. The proposal is designed to accelerate infrastructure development as Europe seeks to compete in the global AI race.

Chips Act 2 will follow up on the EU’s earlier semiconductor strategy, which struggled to boost domestic chip production significantly. The new proposal is expected to refine industrial policy efforts to reduce reliance on foreign suppliers.

Meanwhile, the planned open source strategy aims to support European software ecosystems and reduce dependence on large US technology firms. By encouraging commercially viable open source projects, the EU hopes to strengthen its long-term digital autonomy.

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UN calls for global action against online scam networks

Online scam networks operating across Southeast Asia are defrauding victims worldwide, using AI, impersonation techniques, and complex cyber tools to steal billions of dollars.

At the Global Fraud Summit in Vienna, the UN Office on Drugs and Crime (UNODC) and INTERPOL brought together governments, law enforcement, and private-sector actors to strengthen international cooperation against these crimes.

Victims include individuals from diverse backgrounds, often highly educated and financially experienced. One Australian couple, Kim and Allan Sawyer, lost more than $2.5 million after engaging with what appeared to be a legitimate investment opportunity. ‘The scammer was extraordinarily believable,’ Kim Sawyer said. ‘He had a British accent, used all the right financial market terms and knew how to induce us by appearing credible every time.’

UNODC officials warn that these operations extend beyond fraud, forming part of a broader criminal ecosystem driven by organised scam networks, involving human trafficking, corruption, and money laundering.

‘We need to be looking into prosecuting high-level criminals, following the money through financial investigations and identifying the giant networks that operate behind these operations,’ said Delphine Schantz, UNODC’s regional representative for Southeast Asia and the Pacific.

Authorities say the scale and complexity of these crimes require a coordinated global response to dismantle scam networks effectively. ‘The complexity of these crimes requires an equally complex, whole-of-government approach and enhanced coordination among governments, financial intelligence units and digital banks,’ Schantz added.

Investigations in countries such as the Philippines and Cambodia have revealed how scam networks operate on the ground. In Manila, a former scam compound uncovered facilities used to control trafficked workers and evidence of corruption linked to local officials. ‘How do you prove a cybercrime in 36 hours? It is not possible,’ said the Philippines’ Presidential Anti-Organised Crime Commission (PAOCC) operations director, recalling the challenges investigators faced during early raids.

In Cambodia, international prosecutors and investigators have focused on improving cooperation mechanisms, including extradition, asset recovery, and the handling of digital evidence. These efforts are seen as critical in addressing the cross-border nature of scam networks.

Despite increased enforcement efforts, these networks continue to adapt and relocate, maintaining a global reach. At recent international meetings, including a summit in Bangkok involving nearly 60 countries and major technology firms, officials agreed on the need for shared intelligence, joint investigations and coordinated prosecutions.

Victims continue to call for stronger responses. ‘The scammer works twice: they take your money, and they take your soul. They really do. They take your self-worth. And then, you feel like you’re being scammed again, by the authorities’ lack of response,’ Sawyer said.

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AI agents test limits of EU rules

AI agents are rapidly gaining traction, raising questions about whether existing EU rules can keep pace. Unlike chatbots, these systems can act autonomously and interact with digital tools on behalf of users.

Experts warn that AI agents require deeper access to personal data and online services to function effectively. Regulators in Europe are monitoring potential risks as the technology becomes more integrated into daily life.

Lawmakers are examining whether current legislation, such as the AI Act and GDPR, adequately covers agent-based systems. Legal experts highlight challenges around contracts, liability and accountability when AI acts independently.

Despite concerns, many governments remain reluctant to introduce new rules, citing regulatory fatigue. Policymakers may rely on existing frameworks unless major incidents force a reassessment of AI oversight.

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xAI faces lawsuit over alleged misuse of AI image generation

Legal action has been filed against xAI in a US federal court, with plaintiffs alleging that its AI system Grok was used to generate harmful and explicitly manipulated images of minors.

The lawsuit claims that xAI failed to implement adequate safeguards to prevent the creation of such content, despite similar protections adopted by other AI developers.

According to the filing, the technology enabled the transformation of real images into explicit material without sufficient restrictions.

Plaintiffs seek to establish a class action, arguing that the company should be held accountable for both direct and third-party uses of its models. Legal arguments focus on whether responsibility extends to external applications built using the same underlying AI systems.

The case also highlights broader regulatory challenges surrounding AI-generated content, particularly the difficulty of preventing misuse when systems can modify real images. Questions around platform liability, safety standards, and enforcement are likely to shape future policy discussions.

Growing scrutiny of AI developers reflects increasing concern over how generative systems are deployed, especially in contexts involving sensitive or harmful content.

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New licensing rules for crypto platforms in Australia

Australia is advancing plans to regulate digital asset platforms under its financial services framework. The Senate committee recommended passing the Digital Assets Framework Bill 2025, bringing Australia closer to licensing crypto exchanges and tokenisation platforms.

Industry groups have raised concerns about definitions such as ‘digital token’ and ‘factual control.’ Broad wording could inadvertently cover infrastructure providers, including multi-party wallet systems, potentially classifying them as financial service operators.

Ripple Labs emphasised the need for precise language to avoid unintended regulation.

The committee supported the Treasury’s approach while planning to refine technical details through future regulations. Coinbase welcomed the progress but noted ongoing banking challenges for crypto firms.

The bill now proceeds to the Senate for debate and a final vote, which could reshape digital asset operations in Australia.

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Human made labels emerge as industries react to AI expansion

Organisations around the world are developing certification labels designed to show that products or creative work were made by humans rather than AI. New badges such as ‘Human made’, ‘AI free’ and ‘Proudly Human’ are appearing across books, films, marketing and websites as industries respond to the rapid spread of AI tools.

At least eight initiatives are now attempting to create a label that could achieve global recognition similar to the Fair Trade mark. Experts warn that competing definitions and inconsistent certification systems could confuse consumers unless a universal standard is agreed upon.

Some schemes allow creators to download AI-free badges with little or no verification, while others use paid auditing processes that rely on analysts and AI detection tools. Researchers note that defining ‘human-made’ is increasingly difficult because AI technologies are embedded in many everyday software tools.

Creative industries are at the centre of the debate as generative AI rapidly produces books, films and music at lower cost and higher speed. Advocates of certification argue that verified human-created content may gain greater value if consumers can clearly distinguish it from AI-generated work.

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Security warning issued over OpenClaw AI agent

Cybersecurity authorities have warned that vulnerabilities in the OpenClaw AI agent could expose sensitive data. Officials in China say weak default security settings may allow attackers to exploit the system.

Experts in China warned that prompt injection attacks could manipulate OpenClaw when it accesses online content. Malicious instructions hidden in websites may cause the AI agent to reveal confidential information.

Researchers have also identified risks involving link previews in messaging apps such as Telegram and Discord. Investigators in China say attackers could trick the system into sending sensitive data to malicious websites.

Security specialists in China advise organisations to strengthen protections around AI agents. Recommendations include isolating systems, limiting network access and installing trusted software components only.

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Meta removes encrypted messaging from Instagram DMs

Meta will discontinue end-to-end encryption for Instagram direct messages starting in May 2026. The company said the feature saw limited use among Instagram users.

Users with encrypted chats will receive instructions on how to download messages or media before the feature ends. Meta confirmed the change through updates to its support pages and in-app notifications.

The decision comes amid ongoing debate about encryption and online safety on major social platforms. Critics argue that encrypted messaging can make it harder to detect harmful activity involving minors.

Meta said users seeking encrypted communication can continue using WhatsApp or Messenger. The company maintains end-to-end encryption for messaging services outside Instagram.

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French court upholds €40 million GDPR fine for Criteo

France’s highest administrative court has upheld a €40 million GDPR fine against advertising technology company Criteo. Regulators in France concluded that the firm failed to obtain valid consent for tracking users across websites.

The investigation began in 2018 following complaints from privacy groups and examined Criteo’s behavioural advertising model. Authorities in France said the company did not properly respect rights to access, erasure and transparency.

The ruling in France also confirmed that pseudonymous identifiers linked to browsing data can still qualify as personal data. Judges rejected arguments that such identifiers were effectively anonymous.

Privacy advocates say the decision strengthens GDPR enforcement across Europe. Experts in France argue that the case highlights growing scrutiny of online tracking practices used in digital advertising.

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Study warns AI chatbots may reinforce delusional thinking

A new scientific review has raised concerns that AI chatbots could reinforce delusional thinking, particularly among people already vulnerable to psychosis. The review, published in The Lancet Psychiatry, summarises emerging evidence suggesting that chatbot interactions may validate or amplify delusional thinking in certain users.

The study examined reports and research discussing what some have described as ‘AI-associated delusions’. Dr Hamilton Morrin, a psychiatrist and researcher at King’s College London, analysed media reports and existing evidence exploring how chatbot responses might interact with psychotic symptoms.

Psychotic delusions generally fall into three categories: grandiose, romantic, and paranoid. Researchers say chatbots may unintentionally reinforce such beliefs because they often respond in ways that are supportive or affirming. In some reported cases, users received responses suggesting spiritual significance or implying that a higher entity was communicating through the chatbot.

Researchers emphasise that there is currently no clear evidence that AI systems can independently cause psychosis in individuals without prior vulnerability. However, interactions with chatbots could strengthen existing beliefs or accelerate the progression of delusional thinking in people already at risk.

Experts say the interactive nature of chatbots may intensify the effect. Unlike static sources of information such as videos or articles, chatbots can engage users directly and repeatedly, potentially reinforcing problematic beliefs more quickly.

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