Concerns remain even as the EU reaches a landmark deal to govern AI

The EU has emerged as the first major power to introduce a comprehensive set of laws to govern the use of AI after it agreed on a landmark deal for the EU AI bill. The bill will turn into an EU law once it is approved by the European Parliament at a vote scheduled for early 2024.

The provisional agreement defines the rules for the governance of AI in biometric surveillance and how to regulate general-purpose AI systems (GPAIS), such as ChatGPT. “This regulation aims to ensure that fundamental rights, democracy, the rule of law and environmental sustainability are protected from high risk AI, while boosting innovation and making Europe a leader in the field,” said the press release issued by European Parliament.

Other countries, including the US and the UK, are also working on regulations to govern AI so they can benefit from the technology while mitigating the risks. At least 28 countries recently signed the Bletchley Declaration, establishing common opportunities and risks posed by AI.

Impact on EU and non-EU businesses

While the law will apply to companies operating in the EU, it is unclear if companies that are based outside the EU and might have customers in the region will also have to abide by the new rules. “The non-EU firms will have to decide over time whether it’s worth operating in the EU. If the rules are too strict or costly, non-EU firms will just make the decision to ignore the EU market,” said Ray Wang, principal analyst and founder of Constellation Research.

Even industry associations are questioning the impact of the AI Act on businesses. “The new requirements – on top of other sweeping new laws like the Data Act – will take a lot of resources for companies to comply with, resources that will be spent on lawyers instead of hiring AI engineers. We particularly worry about the many SME software companies not used to product legislation – this will be uncharted territory for them,” trade association, DigitalEurope, said in a statement.

Non-compliance with the regulations may result in fines ranging from $8 million (€7.5 million) or 1.5% of the turnover to $37.6 million (€35 million) or 7% of the organization’s global turnover, depending on the nature of the infringement and the size of the company. Importantly, the legislation provides consumers with the right to complain and receive explanations.