EU AI Act Clears Final Hurdle to Become Global Landmark

The European Union (EU) on Tuesday passed the AI Act, a landmark legislative effort that marks the first comprehensive regulations to create guardrails for artificial intelligence.

EU members’ final approval means the act will enter into force next month. The law, first drafted in 2021, was put on a fast track in recent months as global leaders race to adopt safeguards to keep pace with the explosive growth in generative AI (GenAI) adoption.

“This landmark law, the first of its kind in the world, addresses a global technological challenge that also creates opportunities for our societies and economies,” Belgian Digitalization Minister Mathieu Michel said in a statement. “With the AI Act, Europe emphasizes the importance of trust, transparency and accountability when dealing with new technologies while at the same time ensuring this fast-changing technology can flourish and boost European innovation.”

But US companies will certainly take notice as the rules will apply to any company doing business in Europe. And the cost of running afoul of the rules could be substantial, even for multibillion-dollar US firms.

Rules for general purpose AI models will impact companies after 12 months while rules for AI systems embedded into products will strike in 36 months. Bans on AI in predictive policing, and untargeted scraping of facial images from video will come into play in six months. Fines will range from $8.2 million or 1.5% of global turnover to $37.9 million or 7% of turnover, depending on the violation.

Related:EU AI Act Passes: How CIOs Can Prepare

US Impact Will be ‘Profound’

“The EU AI Act clearing its final hurdle today marks a significant milestone in the regulatory landscape of AI globally,” Manoj Saxena, InformationWeek Insight Circle member and founder of the Responsible AI Institute, tells us via email. “Although it may not directly affect US-based AI developers like OpenAI, Microsoft, Google, and Meta until 2025, its implications are profound.”

US companies are already bracing for change, Saxena tells InformationWeek. “We are already seeing an uptick in consultations as our member companies prepare for a future where compliance will not only be mandatory but will also serve as a competitive differentiator in the global marketplace.”

Companies, he says, should not take the act lightly. “This act is setting a precedent that will likely influence AI regulation and development not just in the world, but across the US."

EU’s Big Tech Influence: How Much is Too Much?

US legislators on both sides of the aisle have signaled concern about the EU’s growing influence on US tech interests. A Biden administration executive order sought to establish some US-based rules, but an administration change could see that order easily canceled.

Related:Cranium, Microsoft, KPMG Launch EU AI Hub

“We’re glad to see that the EU is taking on the regulation of frontier AI models,” Daniel Colson, executive director of the AI Policy Institute, tells InformationWeek in an email. “But the American people are clear that they don’t want Europe to take the lead on AI regulation, and want us to craft our own policies.”

He noted that a poll conducted by the AI Policy Institute showed that the majority of Americans, regardless of partisan leanings, want to see the US pave its own way for AI regulation.

“There’s a lot of work to do to improve on the European model of this tiering system as regulation is passed in the US,” he says. “But fundamentally, its approach is sound and on the right track … US regulation has the opportunity to focus even more on reducing the dangers of these most powerful models while broadly supporting responsible innovation.”