The EU’s AI Act: Where Are We Now And What Could Its Impact Be On EU Companies?.

The Aim of the European Union’s Artificial Intelligence Act

Recognising the need for comprehensive regulations and as part of the EU’s digital strategy, the European Union’s Artificial Intelligence Act (AIA) aims to regulate artificial intelligence (AI) to ensure better conditions for the development and use of AI innovative technology and strengthening rules around data transparency and accountability.

The AIA was approved by a majority vote in the EU Parliament on 14 June, 2023. Further discussions will now be entered into between the EU Parliament and its co-legislative body, the Council of the European Union. The aim of these discussions is to reach a provisional agreement on a legislative proposal that is acceptable to both the Parliament and the Council.

When Is AIA Expected To Come Into Force?

The AIA is expected to come into force by the end of this year. The AIA provides for a two-year transition period and companies will have to ensure they are compliant and able to navigate this expanding regulatory landscape. The current AIA bill states that non-compliant companies could face fines totalling up to 4% of their annual worldwide turnover, or €20 million, whichever is higher.

Who Will Be Affected By The AIA?

The AIA has extraterritorial applicability in that the Act will apply to any company that is going to use or make available any AI implementation or technologies in the EU. From an intellectual property (IP) perspective, one can imagine the challenges associated with publically disclosing proprietary algorithms and data sources which are formed by AI. The AIA covers a wide range of AI applications, including high-risk systems that can significantly impact individuals' rights, especially their IP rights.


What Is Next?

In an open letter addressed to the European Commission last month, executives from 150 businesses, including Siemens, Renault, France’s Airbus and Heineken, highlighted the risks of the extreme regulations imposed by the AIA. These signatories addressed their concern and stated that the AIA is ineffective and its consequences could negatively impact competition and ultimately “jeopardise Europe’s competitiveness and technological sovereignty.”

Open AI is here to stay and hopefully after further discussions, the AIA will reflect the EU's commitment to regulating AI technologies while ensuring respect for fundamental rights and fostering innovation.


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