What the Act means for business
As the new Act will impact businesses across all sectors and alter the way data is utilised, it is essential that businesses operating within the EU understand how they will be affected. Furthermore, it is likely that the directions being put forward by the EU will impact further AI regulations across the United Kingdom (UK), United States (US) and Asia.
“The political agreement reached on the EU AI Act brings with it an omnibus law to regulate AI in the EU one step closer,” said Alex Hazell, head of UK privacy and legal, Acxiom. “Ursula von der Leyen, president of the European Commission, said that ‘the AI Act transposes European values to a new era.’ However, technical details still need to be sorted through and EU member states all need to vote on the new law.”
There are concerns that the new regulations will have negative impacts on the recent explosion of technological innovation that the world has seen as there will be more hoops for businesses to jump through. This means that there is a chance that businesses will continue focusing their operations in less-regulated markets until they catch up with the EU’s approach.
“The new AI Act will contain stringent checks and balances on AI tools; the higher the risk inherent in a tool, the more regulations apply, with some applications being banned outright,” said Alex. “The French President, Emmanuel Macron, has already said the AI Act will stifle innovation in the EU and put those in the regulatory crosshairs at a disadvantage to AI organisations in the UK and US.”
Furthermore, there are large fines that can be levied against non-compliant businesses, which heightens the need to ensure strict compliance – perhaps even over-compliance – with the new Act.
“With fines for companies of up to 7% of their global turnover, the EU AI Act has significant teeth,” explained Alex. “The good news is that the Act in its current form is unlikely to change significantly, so organisations in its scope can start to plan their compliance regimes and product roadmaps with a level of certainty. To build out an accountability programme, one starting place would be to modify a pre-existing data protection compliance framework to allow for AI risk assessments, with key provisions of the AI Act likely to apply from 2025.”
Finding the balance
Part of the issue with the rapid onset of AI developments and the growing scale of data across the globe is walking the tightrope between compliance, innovation, privacy and ethics. Data scientists and engineers are always going to try and push the boundaries of what is possible through new tools and architectures, but this must be done correctly and compliantly – the difficulty right now is that there is not much in the way of regulation when it comes to AI.
“With AI, it is important to remember the need for effective regulation extends further than intellectual property (IP) and privacy,” said Alex. “While data protection, copyright and IP infringement issues are of course top of mind for regulators, addressing biases and ensuring fairness in AI systems is crucial for building ethical and equitable applications.
“Striking the right balance between AI automation and human involvement is crucial to maximise the benefits for the betterment of society. Tech needs to be regulated with humans at front of mind or it risks taking a turn for the worse.”
There needs to be a level of cooperation and coordination between the existing regulatory landscape and the one that the EU AI Act is looking to install. This will enable businesses to implement changes to their operations to facilitate the news rules and will also provide a level of trust between regulators and businesses.
Alex explained: “While the technical details are still being ironed out, the EU AI Act needs to work in tandem with existing regulation to create a stable framework that is optimised for everyone, and close collaboration between stakeholders is key to striking a balance between innovation and privacy.”
The data industry saw rapid change in 2023 when it came to AI innovation and there seems to be no loss of momentum at the start of 2024, so it is pivotal that businesses appreciate the efforts required to ensure compliance and regulatory excellence as new laws are brought in.
