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AI regulation

The EU’s proposed AI Regulation

Technological advances in the field of artificial intelligence have brought about sweeping economic and societal benefits, with an exponential boom in the development and deployment of AI systems across sectors.

AI sits at the heart of the global trend towards digitalisation and its various applications have huge potential to improve the ways in which businesses run and in which we, as consumers, interact with them and with each other.

However, with new technological benefits come risks and regulation. On 21 April 2021, the European Commission published its draft legislative proposal on artificial intelligence (the AI Regulation). The AI Regulation attempts to strike a balance between addressing perceived risks linked to AI, on the one hand, and not unduly constraining or hindering technological development or otherwise increasing the cost of placing AI solutions on the market, on the other. Some commentators have already suggested that it is more successful at the former than the latter.

Although the AI Regulation will not come into force until it has passed through the European legislative process, the significant regulatory requirements in the proposed text cannot be ignored. The AI Regulation will play a key role in shaping how AI is developed in the EU and will likely also serve as a blueprint for other regulatory authorities around the world contemplating similar regulation. It could also provide another opportunity to test the new and emerging relationship between the EU and the US on technology and data issues.

The AI Regulation encompasses a wide-ranging set of rules seeking to regulate the pervasive use of AI across a spectrum of industries and social activities, with rule breakers facing the possibility of fines of up to 6% of global turnover. It is a culmination of three years of work, during which the Commission undertook extensive consultations with industry and wider society, receiving more than 1,200 responses worldwide on its February 2020 White Paper alone.

At its core, the AI Regulation proposes a sliding scale of rules based on risk: the higher the perceived risk, the stricter the rule. This, the Commission believes, will allow legal intervention to be tailored to those situations where it thinks there is justified cause for concern or where such concern can reasonably be anticipated in the near future.

We outline below which businesses are affected by the AI Regulation, what they need to know and how they should be approaching compliance in the future.