The European Commission has presented a broad simplification initiative aimed at reducing regulatory burdens across the EU’s digital framework. Announced on 19 November 2025, the package represents one of the most extensive attempts in recent years to rationalize overlapping rules affecting artificial intelligence, data protection, cybersecurity, and digital public services. By consolidating requirements and aligning compliance obligations across different legal instruments, the Commission seeks to tackle inconsistent implementation among member states, a recurrent issue that has generated uncertainty for companies operating in multiple jurisdictions.
In presenting the plan, the Commission emphasized that small and medium-sized enterprises (SMEs) are disproportionately affected by fragmented rules, often lacking the legal and technical resources to navigate them effectively. Simplification, according to Brussels, is therefore not merely a bureaucratic exercise but a strategic step to enhance competitiveness, accelerate innovation, and ensure that Europe’s regulatory framework remains manageable as technologies evolve.
A New Administrative Infrastructure for Businesses
At the heart of the initiative is the proposed European Business Wallet: a secure, standardized digital identity system tailored specifically for companies. The wallet would allow businesses to verify their identity when interacting with public administrations, digitally sign official documents, and seamlessly exchange certificates such as tax records, compliance attestations, and company registrations.
The Commission frames the wallet as a remedy to persistent administrative fragmentation: despite years of digitalization efforts, many procedures still rely heavily on paper forms or incompatible national systems. By offering a unified interface, the wallet is intended to reduce duplication, accelerate cross-border processes, and create a more predictable environment for business operations throughout the single market.
Early impact assessments from Brussels suggest that harmonizing these procedures could save European businesses an estimated €150 billion annually, a figure attributed to reduced processing times, lower administrative fees, and fewer errors linked to manual workflows.
Extended Timelines for High-Risk AI Systems
Another major element of the package is the proposed adjustment to the implementation timeline for the EU’s AI Act. Companies developing or deploying high-risk AI systems, such as technologies used in biometric identification, financial decision-making, medical diagnostics, or sensitive law-enforcement contexts, would have until December 2027 to meet full compliance obligations. This extension adds roughly 16 months to the original rollout schedule.
The Commission argues that the additional time is necessary to ensure uniform enforcement across sectors that face different levels of technical complexity. Many businesses, particularly SMEs and public authorities, indicated that the initial deadlines were too ambitious given the resources required to prepare conformity assessments, establish risk-mitigation protocols, and restructure data-governance processes. The revised timeline seeks to avoid rushed implementation while safeguarding the core protections embedded in the Act.
Targeted Modifications to Data Protection Rules
The package also proposes targeted amendments to data-protection requirements, particularly concerning how personal data can be used for AI development. One of the most notable changes is a clarification of the legal category of “pseudonymized data”. Under the revised interpretation, data that has been altered to remove direct identifiers but could still be re-linked under controlled conditions may be subject to fewer of the GDPR’s strictest limitations when used specifically for AI training.
In addition, the Commission introduces the possibility for companies to rely on “legitimate interest”, rather than explicit user consent, as a lawful basis for certain AI-related data-processing operations. This would apply only under narrowly defined circumstances and with heightened safeguards. Policymakers argue that these changes better reflect evolving case law and the realities of large-scale data analysis, where traditional consent models can be impractical or overly rigid. Critics, however, note that even minor shifts to legal bases for processing can have significant effects on individual rights and corporate responsibilities.
Civil Society Raises Concerns Over Safeguards
Digital-rights groups have voiced strong concerns about the Commission’s proposal, criticizing what they view as a dilution of legal safeguards established under the GDPR, the e-Privacy Directive, and the AI Act. Organizations such as European Digital Rights (EDRi) warn that relaxing rules on pseudonymized data and expanding the use of “legitimate interest” could weaken individuals’ control over their information and reduce oversight of high-impact AI systems.
According to reporting from The Guardian, some civil-society groups describe the initiative as a “rollback” of digital protections, arguing that simplification must not come at the expense of accountability or transparency. They caution that the reforms could limit the ability of citizens to challenge automated decisions, understand how their data is processed, or hold companies and public authorities responsible for misuse. The debate underscores the increasingly tense balance between encouraging innovation and preserving Europe’s rights-based regulatory model.
Next Steps in the EU Legislative Process
The proposal now heads to the European Parliament and the Council, where lawmakers and national governments will examine its components in detail. Negotiations are expected to focus on the balance between reducing administrative burdens and maintaining the strong digital-rights framework that has become a hallmark of EU policy.
Member states may diverge on issues such as data-protection flexibility, the scope of the European Business Wallet, or the AI Act’s extended timeline, all of which carry implications for national legal systems and economic strategies. The final outcome will depend on the ability of EU institutions to reconcile these differing priorities while responding to rapid technological change. Once adopted, the package is likely to shape the trajectory of European digital governance for years to come.
Frequently asked questions
1. What is the European Business Wallet?
It’s a digital identity tool that would let companies authenticate themselves, sign documents and share certificates across the EU.
2. What is changing about AI compliance deadlines?
The EU plans to give companies more time, until December 2027, to meet the rules for high-risk AI systems.
3. What is the goal of updating data-protection rules for AI?
The aim is to clarify how companies can legally process data for AI development without always needing explicit consent.
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