Economic

OECD calls for smarter regulation to boost competitiveness and innovation

The Organisation for Economic Co-operation and Development (OECD) has published a report on regulatory simplification, warning that excessive and fragmented rules can undermine competitiveness, investment, and innovation. The report, titled ‘Smart Regulations, Strong Business’, was approved and declassified by the OECD Regulatory Policy Committee on 18 May.

The report draws on the OECD’s Simplifying for Success surveys, conducted between July and September 2025 among governments and business organisations across OECD Members, accession countries, and the European Union. Responses were received from 34 jurisdictions, with the analysis also drawing on OECD regulatory governance data and discussions from a 2025 high-level symposium.

The OECD emphasises that regulation remains essential for market functioning, public health and safety, and transparent government processes. However, the report argues that the accumulation of rules and administrative requirements has created increasingly complex systems that are more difficult for businesses to navigate, comply with and adapt to.

Survey findings show that government respondents in 72% of participating countries and business organisations in 90% of countries consider current levels of regulation and bureaucracy to be excessive. More than three-quarters of business organisations also said full compliance is too costly, while many linked the regulatory environment to negative effects on competitiveness, investment, and innovation.

The report says regulatory burdens often stem from reporting, record-keeping, permitting, inspections, and fragmented rules, rather than solely from substantive policy goals. The OECD recommends targeting areas where regulatory burdens are greatest, streamlining administrative procedures through risk-based and digital approaches, and making rulemaking more future-ready through evidence-based policymaking, stakeholder engagement and stronger coordination.

Why does it matter?

Governments around the world are seeking ways to improve competitiveness and stimulate innovation while maintaining high standards of consumer protection, safety and market oversight. As regulatory frameworks expand, concerns have grown about the cumulative costs of compliance and administrative complexity for businesses.

The OECD’s findings contribute to broader debates on regulatory reform, highlighting the importance of balancing effective regulation with efficiency. The report also reflects growing interest in digital tools, risk-based approaches and evidence-driven policymaking as ways to reduce unnecessary burdens without weakening regulatory objectives.

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New York passes child protection law targeting AI companion chatbots

New York State has approved legislation aimed at strengthening protections for minors interacting with AI chatbots, marking one of the first targeted regulatory efforts focused on AI companion technologies. The bill, known as S9051B, introduces restrictions on chatbot features that may encourage harmful emotional dependence or unsafe behaviour among young users.

The law prohibits AI systems from presenting themselves as real or fictional human beings in ways that could mislead minors and restricts outputs that encourage self-harm, disordered eating or other harmful behaviour. The legislation specifically targets design features that may foster emotional dependency between children and AI systems, reflecting growing concerns over their potential psychological effects.

Sponsored by Senator Kristen Gonzalez and Assemblymember Alex Bores, the legislation was developed in consultation with New York Attorney General Letitia James and child safety organisations, including Common Sense Media. Supporters of the bill argue that rapid advances in AI have outpaced existing safeguards, leaving young users vulnerable to emerging risks.

Supporters say the measure is part of a wider push for responsible AI governance in New York, focusing on transparency, accountability, and consumer protection. Advocacy groups involved in developing the legislation have pointed to real-world cases as evidence of the need for stronger oversight of emotionally interactive AI systems.

Why does it matter?

AI companion applications are becoming increasingly sophisticated and capable of sustaining long-term, emotionally engaging interactions with users. While these systems may provide entertainment, companionship or support, concerns have emerged about their potential influence on children and other vulnerable users.

By focusing on chatbot design features rather than solely on content moderation, New York’s legislation introduces a new approach to AI governance that could influence future regulatory efforts in the United States and beyond. The law also reflects growing attention to the psychological and social impacts of generative AI systems.

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UK launches AI skills and jobs initiative for young people

The UK government has announced a new package for young people entering the labour market as AI continues to reshape entry-level roles and career pathways. The package includes an Early Careers Jobs Alliance, AI bootcamps, and expanded technology training for students from disadvantaged schools, with AI bootcamps serving as a central route into paid apprenticeships for young people at risk of unemployment.

The Early Careers Jobs Alliance will bring together government, employers, trade unions and young people to examine how AI is changing entry-level employment and career development. Backed by £20 million in funding, the initiative will initially focus on the Digital and Technologies sector before expanding across all eight Industrial Strategy sectors, including advanced manufacturing, clean energy, defence, financial services, and life sciences.

The alliance will analyse how entry-level work is evolving, develop guidance for businesses on redesigning roles while preserving career pathways, and identify examples of good practice. An initial report is expected in autumn.

Through the TechFirst programme, at least 400,000 students from some of the UK’s most disadvantaged schools will receive support in AI and digital skills through training sessions, competitions, extracurricular activities and engagement with industry. The AI bootcamps are intended to provide a more direct route into work for young people at risk of leaving education or training.

The UK government will also pilot free AI bootcamps in Lancashire and Greater Manchester this summer for young people at risk of leaving school after GCSEs and entering unemployment. Participants who successfully complete the bootcamp will be guaranteed a paid AI apprenticeship with local employers, with a broader rollout across England planned if the pilot proves successful.

A separate pilot linked to the North East AI Growth Zone will launch in early 2027 for young people aged 18 to 24 who are not in education or employment. Participants will receive at least 6 months of hands-on AI training with companies including Accenture, Microsoft, and Sage.

Why does it matter?

AI is beginning to transform many entry-level and administrative roles, raising concerns about how young people will gain work experience and build careers in an increasingly automated economy.

The UK’s approach combines workforce planning, skills development and employer engagement to help ensure that AI adoption creates new opportunities rather than limiting access to employment. The initiative also reflects growing efforts by governments to align education and training systems with the changing demands of the labour market.

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India targets dark patterns with fines for PhysicsWallah and McAfee

India’s Central Consumer Protection Authority has fined PhysicsWallah and McAfee Software India for using dark patterns that the regulator said misled consumers and influenced their choices on digital platforms.

PhysicsWallah was fined ₹5 lakh, while McAfee was fined ₹1 lakh. Both companies were directed to remove the practices from their platforms and ensure that users can make informed choices without pressure or manipulation.

The action was taken under the Consumer Protection Act 2019, the Consumer Protection (E-Commerce) Rules 2020, and the Guidelines for Prevention and Regulation of Dark Patterns 2023.

In the PhysicsWallah case, the regulator found that a ₹10 donation to the PW Foundation was automatically selected during checkout and added to the total payable amount without the consumer’s explicit consent. Users were also shown emotional messages related to children’s education, healthcare, and marriages that encouraged them to keep the donation selected.

The CCPA also found that courses advertised as free could only be accessed after users shared personal information such as a mobile number and email address. The regulator said the content remained the same across user accounts, indicating that mandatory data collection was not necessary to access the courses.

The authority identified basket sneaking, confirm shaming, and forced action in the PhysicsWallah case. It also said the practices raised serious consumer protection concerns because many users on the platform are students, including minors.

In the McAfee case, the CCPA found that users deciding whether to renew subscriptions were shown options such as ‘Renew Now’ and ‘Accept Risk’. The authority said the wording portrayed non-renewal as a risky decision and created pressure on consumers to continue their subscriptions.

The regulator identified confirmation shaming, interface interference, trick questions, and forced action in McAfee’s renewal process, saying consumers should be able to make subscription decisions freely and without fear-based messaging or misleading design.

The CCPA said the orders form part of its continued action against dark patterns in digital marketplaces. It reiterated that consumer consent must be explicit, informed, and free from manipulative design practices.

Why does it matter?

The penalties show that dark pattern rules in India are moving from guidance to enforcement. By targeting pre-selected donations, emotionally loaded opt-out messages, forced data sharing, and fear-based subscription renewal design, the CCPA is signalling that manipulative interface design can be treated as a consumer protection violation, not just a poor user experience.

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Russian State Duma advances crypto licensing bill in first reading

Russia’s State Duma has approved the first reading of draft law No. 1194918-8, ‘On Digital Currency and Digital Rights’, moving the country closer to a formal legal framework for cryptocurrency activity.

The bill would establish a legal framework for the circulation of digital currencies in Russia and vest key supervisory powers in the Bank of Russia. It would also reform parts of the existing framework for digital financial assets and digital rights.

The proposed legislation would channel cryptocurrency activity through regulated intermediaries, including licensed exchanges, brokers, and authorised financial entities. Firms already operating within the Bank of Russia’s experimental legal regime would be able to use simplified approval procedures.

The draft maintains Russia’s prohibition on the use of cryptocurrency for domestic payments, while creating a framework for the use of digital currencies in foreign trade and cross-border settlements.

Retail access would remain limited. Non-qualified investors would be subject to purchase limits, while professional participants and licensed institutions would operate with broader access under regulatory oversight.

The bill would also define digital currency as property, strengthening its legal status in areas such as disputes, enforcement, and insolvency.

The proposal reflects Russia’s effort to bring cryptocurrency activity under tighter state supervision while preserving selected use cases for international transactions. The bill must still pass further readings before becoming law.

Why does it matter?

The bill shows how Russia is moving towards a controlled crypto framework rather than full market liberalisation. By allowing regulated circulation through licensed intermediaries while maintaining a ban on domestic payments, the proposal would give the state greater oversight of digital asset activity. The foreign trade angle is especially significant because Russia has been exploring alternative settlement channels amid sanctions and restrictions on access to traditional financial infrastructure.

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Hungary prepares rollback of crypto penalties

Hungary is preparing a significant shift in its digital asset policy after newly appointed Science and Technology Minister Zoltán Tanács announced plans to dismantle restrictive measures imposed by the previous government. The proposed changes would remove criminal penalties for unauthorised crypto services, marking a clear reversal in national regulatory direction.

The earlier framework, introduced in July 2025, tightened oversight of crypto activity and led several firms to scale back services in the country due to increased compliance pressure. The incoming policy direction frames those measures as politically driven rather than market-supportive, signalling a shift toward regulatory easing and improved competitiveness.

Alongside crypto reform, authorities are also reassessing cybersecurity auditor obligations linked to the EU’s NIS2 directive, a regulatory structure designed to strengthen digital infrastructure resilience. The changes could affect roughly 4,000 Hungarian companies approaching a 30 June compliance deadline, adding urgency to the policy review.

Hungary’s broader digital strategy appears to be aligning more closely with EU-wide standards such as the Markets in Crypto-Assets framework, which aims to harmonise rules across member states. The government is also reportedly drawing inspiration from Estonia’s digital governance model, seeking a more innovation-friendly regulatory environment while maintaining alignment with the EU.

Why does it matter?

If Hungary follows through, the shift could improve regulatory predictability across Central Europe, support the return of fintech and crypto firms, and increase competitive pressure on jurisdictions that continue to apply stricter or less consistent crypto rules.

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China widens access to value-added telecom services for foreign companies

China’s Ministry of Industry and Information Technology (MIIT) has approved 166 foreign-invested enterprises to participate in pilot programmes for value-added telecommunications services since the first approvals were issued in February 2025, according to Xinhua.

The approved companies are authorised to provide services across China, including internet data centre operations, internet access services and information services. The move forms part of broader efforts to expand access to the country’s telecommunications market.

The ministry said the reforms align with international trade and investment rules while building on existing policy frameworks, including China’s commitments under the World Trade Organization and regulations governing free-trade zones. Under the pilot measures, foreign ownership restrictions have been lifted for selected categories of value-added telecommunications services.

More than 3,100 foreign-invested telecommunications enterprises are currently operating in China, and authorities said additional measures are planned to encourage further participation in the sector. Pilot reforms are currently being implemented in Beijing, Shanghai, Hainan and Shenzhen.

Why does it matter?

China’s telecommunications sector has historically maintained restrictions on foreign participation, particularly in value-added services. Expanding pilot programmes and easing ownership limits could increase opportunities for international companies seeking access to one of the world’s largest digital markets.

The reforms also signal China’s broader efforts to attract foreign investment and align aspects of its telecommunications framework with international trade commitments, while testing market-opening measures in selected regions before potential wider implementation.

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UK regulator launches AI-assisted review of gambling advertising

The UK Gambling Commission has announced a new compliance initiative targeting gambling advertising, following an enforcement notice issued by the Committee of Advertising Practice (CAP). The measure aims to prevent gambling advertisements from having a strong appeal to people under 18.

From 11 June, CAP will conduct a monitoring exercise using its AI-powered Active Ad Monitoring System in collaboration with social media platforms. The review will assess whether gambling advertisements comply with rules intended to protect children and other vulnerable audiences.

Under the enforcement notice, businesses found to be in breach of the rules may be required to amend or remove advertisements without delay. Failure to comply could lead to sanctions, including referrals to hosting platforms or the Gambling Commission.

The Gambling Commission said operators must ensure that all advertising, including content published on social media, remains socially responsible and complies with CAP and Broadcast Committee of Advertising Practice (BCAP) requirements.

Why does it matter?

Regulators are increasingly using AI tools to monitor online advertising at scale, particularly in areas where consumer protection concerns are significant. Gambling advertising remains a sensitive issue because of its potential impact on children and other vulnerable groups.

The initiative signals a more proactive approach to enforcement, combining automated monitoring with platform cooperation to identify problematic content more quickly and strengthen compliance with advertising standards.

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Canada launches AI for All national strategy to accelerate adoption and digital sovereignty

Canada has launched AI for All, a new national AI strategy aimed at accelerating AI adoption, strengthening digital sovereignty, and positioning the country as a leading AI economy.

Announced by Prime Minister Mark Carney, the strategy combines proposed legislation, investments, and programmes intended to ensure AI is adopted responsibly and benefits businesses, workers, students, and communities across Canada.

The strategy targets an additional C$200 billion in economic growth, 250,000 new AI-related jobs over the next five years, and an increase in AI adoption from just over 12% today to 60% by 2034. The government also plans to provide up to 90,000 AI-related jobs and work placement opportunities for young Canadians.

The strategy is built around three principles: building trust, creating opportunities, and reinforcing Canadian sovereignty. To build trust, the government plans to modernise digital legislation, strengthen protections for personal information, address harms such as deepfakes and surveillance pricing, introduce an online safety regime, and expand the capabilities of the Canadian AI Safety Institute.

To create opportunities, the government will establish a National AI Literacy Initiative, provide access to trusted AI agents for post-secondary students, help small and medium-sized businesses adopt AI, support worker training, and launch an AI Missions Program with a flagship health mission focused on diagnostics, patient care, and system efficiency.

To reinforce sovereignty, Canada plans to build domestic AI foundations, including compute, cloud, connectivity, data, and talent. Measures include a world-leading public AI supercomputer, investments in sovereign compute and cloud infrastructure, better access to growth capital for Canadian AI companies, strategic public procurement, and expanded support for AI talent.

The government said the strategy is intended to ensure more AI value is created in Canada while strengthening privacy, data protection, public services, productivity, and economic security.

Why does it matter?

Canada’s AI for All strategy links AI adoption directly to economic growth, workforce development, public trust, and technological sovereignty. The strategy reflects a wider shift among governments: AI policy is no longer focused only on research excellence, but also on compute infrastructure, cloud sovereignty, data governance, safety institutions, business adoption, public procurement, and skills. Its success will depend on whether Canada can turn ambitious targets into measurable adoption across businesses, public services, and workers.

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UK Ofcom sets out AI safety and innovation strategy

Ofcom has outlined its approach to enabling safe and secure AI adoption across the UK communications sectors it regulates and within its own work.

The regulator said its approach is technology-neutral and outcomes-based, aligning AI oversight with its wider mission of making communications work for everyone while supporting innovation and growth.

Ofcom’s report uses case studies to show how AI is already shaping regulatory work and the sectors it oversees. Planned and recent initiatives include building a pilot data lake to make spectrum licensing and online safety data more accessible, engaging with innovators to identify regulatory uncertainty, and assessing public trust in AI chatbots.

The regulator is also examining the impact of AI on telecoms customer experience, exploring AI deployment in broadcasting, assessing AI use in cybersecurity for telecommunications networks, and considering how AI could support network management and optimisation.

Alongside innovation support, Ofcom said it is monitoring AI-related risks and emerging harms. Its work includes guidance on technology-led mitigation against deepfakes, research into chatbot-related harms, and action to address risks posed by AI systems to users.

Ofcom said it coordinated with the AI Security Institute and the National Cyber Security Centre to brief stakeholders on the frontier AI cybersecurity implications following Anthropic’s preview of Claude Mythos, which caused concern. It also said it launched a formal investigation into X’s Grok chatbot.

The regulator is also piloting responsible AI use internally, including tools to support policy development, research, consultation processes, tracking of technical standards, and operational efficiency. Ofcom said it will take a safety-first approach and roll out internal AI tools only once it is confident they are safe and secure.

Why does it matter?

Ofcom’s approach shows how AI governance is becoming operational inside sector regulators, not only debated at the government level. The strategy links innovation support with risk monitoring across online safety, telecoms, broadcasting, cybersecurity, spectrum management, and consumer protection. It also shows regulators experimenting with AI in their own workflows while trying to maintain safety, accountability, and public trust.

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