Will the European Union AI Act really choke EU businesses?

Artificial Intelligence (AI) - it seems you can't move at the moment without coming face to face with its use, the risks and questions about ethics. The news agenda is full of discussions surrounding AI regulation.

Leading the march in this space, is the European Union (EU), which has been consulting on regulation for AI since 2019, and proposed the outline for an AI Act in 2021. As other nations, debate it, the EU already has a plan - and the proposed legislation - to regulate the use of artificial intelligence by businesses in the EU. Indeed, the European Union AI Act could set a global precedent for AI regulation, and shape all future guidelines globally, including strict parameters for businesses regarding AI use, that aims to both safeguard human rights and interests and boost innovation.

However, the AI enthusiasts fear that these regulations will stifle productivity, innovation and may make Europe a less attractive market. It's an interesting question: will the European Union AI Act harm productivity in the EU or worst still cause businesses to flee the EU?

The Act's main aim is to create a legal framework to regulate a broad range of AI applications, from facial recognition to chatbots, ensuring that the technology reflects EU ethical standards. According to EU regulators, the legislation will increase transparency and accountability, opening up new growth opportunities by building trust among businesses and the general public.

The legislation is set to have a significant effect on businesses in the region, providing progressive AI policies for businesses in all EU member states. It's chief proponent, European Commissioner for the Internal Market, Thierry Breton, said that the AI Act would create a "level playing field for all companies," something that is necessary for a modern, competitive, and digital market.

Some of the elements the EU's AI Act plans to regulate include:

• AI applications, including chatbots, voice assistants, fraud detection tools, and high-risk applications (e.g. medical devices, biometric identification, and critical infrastructure)
• Data transparency, accountability, and non-discrimination in AI deployment
• Human oversight and algorithmic decision-making with explainability
• The creation of a European Artificial Intelligence Board to regulate AI development and deployment
• Fines for non-compliance with EU AI regulations and regular implementation reports and compliance reviews.

Equally, many businesses are already worried about the ethical and security concerns surrounding AI and its potential impact on society. Rather than scare businesses away, the proposed AI regulations may also attract new investments from businesses that prioritize ethics, contributing to the EU's future growth opportunities. EU policymakers believe that the AI Act will improve data privacy, accountability, and governance, which is essential to building consumer trust in AI applications.

Recently Google and the European Commission announced that they are working together to create an AI Pact that will introduce guidelines for the ethical and safe usage of AI technology before the AI Act becomes law in the EU. The pact will aim to encourage the development of trustworthy AI, and promote transparency, efficacy, and human oversight.

That's fine for a global giant like Google, but some experts express concerns about the effects of the AI Act could have on innovation, arguing that regulations might lead to more bureaucracy, hamper innovation, and slow down the adoption of AI technologies. They also worry about the cost of compliance, especially for smaller companies, and how this may transform into a barrier to entry. However, the EU say it intends to create a new support program for smaller businesses to cover those expenses and incentivize the adoption of ethical, responsible AI in their operations.

The future of AI is far from certain, and it is impossible to predict with any certainty how the use of AI will develop. However, the EU stress the act is an essential step towards creating an ethical and trustworthy AI environment that is conducive to innovation, prosperity and one that prioritizes human rights and interests. While the regulations may affect business operations in the short term, particularly those with AI applications that are currently non-compliant, the effects are expected to be more beneficial to the industry in the long term. The aim of regulation, after all, is to safeguard and protect, not control. Therefore, it's perhaps okay to suggest the European Union AI Act is not a threat to EU growth, but an opportunity to invest in ethical AI and establish industry leadership in shaping its future.

What are your views? Is your business using AI already? Have you considered the risks or the things you will need to implement to mitigate them? Ideagen's 2023 Predictions report contains a section on ethics in AI to help organisations using it understand what they need to consider. And on 8 June 2023 at 19:00 BST we'll be doing a deep dive specifically on AI risk in our latest webinar, click here to sign up.

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