To cut smoking, the US government taxes tobacco, yet it subsidises tobacco farming. The EU’s approach to AI displays a similar contradiction: it funds AI research while subjecting it to the world’s strictest regulations. The European Commission recently announced plans to increase that funding, to make more data available for use in AI, and to work with EU member states on a strategy for deploying AI in the European economy. But at the same time, the EU’s new General Data Protection Regulation (GDPR) puts tight restrictions on uses of AI that involve personal data, and EU policymakers continue to search for additional restrictions on AI to address their remaining fears. Unlike tobacco, AI has many beneficial uses, and the potential risks depend on how it is developed and used over the long-term. The irony is that if Europe over-regulates AI now, it will miss its chance for global influence over the technology’s future.