Aiming to fight what they see as vague and overly burdensome regulation by the European Union, U.S. tech giants are playing one of the strongest cards they have: withholding their products.

Why it matters: Until now, the U.S. tech giants have dominated the global digital economy by serving (almost) everyone, accepting divergent regional laws as the cost of doing business.

Driving the news: As Axios scooped yesterday, Meta has decided not to release a new multimodal AI model and related products in the EU.

• The move follows a similar decision last month by Apple to withhold its new Apple Intelligence features from Europe.
• Separately, Meta also announced yesterday it would take a similar approach in Brazil, suspending the availability of its generative AI tools there after a privacy dispute with regulators.

Between the lines: While both companies are objecting to the vagueness and opacity of European law, Meta and Apple are taking issue with two different laws.

Apple's objection is to the Digital Markets Act, relatively new legislation that aims to increase competition and keep large companies from favoring their own products.

• The DMA requires companies make their products easily interoperable with competitors' offerings, and Apple says that will put its users' privacy and data at risk.

Meta's problem is with Europe's older privacy law, the GDPR.

• Meta says the EU has not provided clarity over what the GDPR requires for it to make use of customer data to train its AI models.
• These concerns come even before the provisions of another major piece of legislation, the EU's first-of-its-kind AI Act, kick in.

Yes, but: While Apple and Meta are signaling their unhappiness with the current state of European regulation, it's doubtful they would give up entirely on such a large market as tech enters a new era of computing with the advent of generative AI.

The intrigue: If neither side blinks, no one knows for sure how the market will evolve.

• Some would argue the absence of the U.S. giants could open the door to more European players, at least in the EU market.
• However, Europe has been regulating the tech industry more tightly than the U.S. for decades.

The tighter EU rules have led to changes in policy at the tech firms — and those changes have often been adopted globally, conferring additional protections or options for consumers around the world.

• But through all those conflicts, Europe hasn't made much progress toward its broader goal of encouraging homegrown competitors to the U.S. giants.

What we're watching: If companies like Apple and Meta keep withholding products and services from the EU and local alternatives do step in to fill the gap, the whole global online market could change.

• But matching the scale, reliability and lock-in of today's Big Tech offerings will be an uphill fight for any such challengers.

Geopolitical tensions between the U.S. and China are shaking the chip sector at a time when AI has driven demand sky-high.

Driving the news: Former President Trump chided Taiwan in a Bloomberg interview published Tuesday for taking "about 100% of our chip business" and using the U.S. as an "insurance policy" against China.

• "Taiwan should pay us for defense. … Taiwan doesn't give us anything," he said.
• A separate Bloomberg report said the Biden administration is considering imposing severe new U.S. trade restrictions to prevent China from obtaining advanced chipmaking tools from firms like ASML and Tokyo Electron.

Zoom in: The Biden team, facing pressure from domestic companies that feel disadvantaged by existing U.S. trade restrictions, is attempting to sway allies to limit their own companies from continuing to supply advanced semiconductor technology to China.

The big picture: "Governments around the world view this as an industry of strategic importance," David Isaacs, vice president of government affairs at the Semiconductor Industry Association, recently said in D.C. on an Amazon AWS Summit panel moderated by Axios.

• "The U.S. and the world [are] reliant — 92% — on leading-edge chips from the island of Taiwan, and the remaining 8% from South Korea," he noted.
• "You don't need to be a geopolitical genius, or risk analyst, to recognize that that is dangerous and a problem waiting to happen."

State of play: While AI development has driven recent demand for chip production, there's been little to no expansion on the supply side to support growing appetites.

• For example, Netherlands-based ASML remains the only company in the world that makes a specific kind of machine that carves circuits onto the most advanced chips.
• And Taiwan Semiconductor Manufacturing Company (TSMC) remains the primary manufacturer for chips designed by the likes of Nvidia, AMD and Apple, and it's only recently started to open factories outside of Taiwan.

Spotify yesterday launched a Spanish-language version of its AI DJ — a generative AI feature that delivers personalized playlists along with narration based on the voice of a real person.

Why it matters: Dubbed "Livi," the move is further evidence of the music streaming platform's ambitions to drive growth and loyalty through AI tools.

• Since launching its first-ever AI DJ, "X," in English about 18 months ago, Spotify has seen increased time spent on the app among people who use the feature, Xavier Jernigan, Spotify's head of cultural partnerships and the voice model and personality behind "X," told Axios in an interview.
• "It becomes their primary way of listening," he said.
• And with Spanish native speakers the second-largest language group around the world (roughly 500 million), "it made sense" to extend AI DJ in this direction, Jernigan added.

How it works: The Spanish-speaking "Livi" is available for Spotify Premium members in dozens of markets where "X" is currently available.

• It's also expanding to Premium users in Spain and more than a dozen Latin American markets, including Argentina, Colombia and Mexico.

The intrigue: Spanish is spoken very differently across Latin America and especially in Spain. While "Livi" will be leaning into her Mexican identity — dialect and all — a team of writers, data curators, music editors and user-experience engineers are also working to incorporate other ways of speaking Spanish, Jernigan said.

• "We hope people connect with her, her voice, her personality, things that make her unique. But we will localize as best we can, knowing those local cultures and upholding and showing respect and reverence for those cultures," he added.
• "It's your DJ Mexican host that is going to give you recommendations, context, regarding the market you are in," said Olivia Quiroz Roa, a Mexico City-based music editor at Spotify and the voice model for "Livi."

• Demand for software developers, which soared during the COVID-19 pandemic in 2021, has plunged, but not because of competition from genAI. (Axios)
• AI ethics expert Timnit Gebru announced yesterday she is writing a memoir/manifesto titled "The View From Somewhere." (X)

Since I already have Olympics on the brain, check out this Simone Biles-inspired animation made from 120 separate street stencil images.