On Friday, December 8, 2023, the European Parliament and Council reached political agreement on the European Union’s Artificial Intelligence Act (“EU AI Act“). The EU seeks to create a comprehensive legal framework for the regulation of AI systems across the EU – with the aim of ensuring that AI systems are “safe” and “respect fundamental rights and EU values”, while looking to encourage AI investment and innovation in Europe. Note that the consolidated text of the EU AI Act has yet to be finalized and its provisions will apply two years after its entry into force.
Why the need to regulate AI:
Artificial Intelligence refers to the development of computer systems capable of performing tasks that typically require human intelligence. These tasks may include problem-solving, learning, decision-making, language translation, and more.
The need to regulate AI arises from concerns about potential risks associated with AI systems, such as biases, lack of transparency, threats to fundamental rights, safety risks, and potential negative societal impacts. Regulating AI aims to ensure the responsible and ethical development, deployment, and use of AI systems.
Provisions and Penalties of the EU AI Act:
The proposed EU AI Act introduces a risk-based approach to categorize AI systems into different risk levels based on their potential impact on fundamental rights, safety, and societal values.
It includes provisions such as:
Prohibited AI practices: Certain high-risk AI applications are prohibited, including those that pose risks to human safety, manipulate human behavior, and employ social scoring by governments.
Obligations for high-risk AI systems: Requirements for high-risk AI systems include data quality, transparency, human oversight, documentation, robustness, accuracy, and more.
Transparency and accountability: The Act emphasizes transparency in AI systems, ensuring users are aware they are interacting with AI and guaranteeing explanations for AI-generated decisions.
Penalties for non-compliance: Fines for violating the Act can be significant, reaching up to €30 million or 6% of the total worldwide annual turnover, depending on the severity of the infringement.
Perceived Limitations:
Some concerns about the EU AI Act include potential limitations in its scope and enforcement, challenges in defining and identifying high-risk AI systems, potential hindrances to innovation due to stringent requirements, and the global harmonization of AI regulations.
Impact on Commerce:
The EU AI Act is expected to significantly impact commerce, especially for businesses dealing with AI technology within the EU. Compliance with the Act’s requirements will necessitate adjustments in how AI systems are developed, used, and deployed. Businesses will need to ensure their AI systems meet the stipulated standards, affecting innovation, investment, and the development of AI technologies in the EU market.
The content above is for informational purposes only. It is not intended to be a comprehensive guide on the regulation nor a legal advice. We strongly recommend that you consult a qualified attorney for EU AI Act related guidance. Provisional text of the EU AI Act can be found here.