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  1. Looking ahead

The EU’s proposed AI Regulation

Looking ahead

The AI Regulation will apply (with limited exceptions) to AI systems that are placed on the market, put into service, or high-risk AI systems that have significantly changed, two years after the AI Regulation enters into force. An AI system’s inherent adaptation on the basis of its machine learning application does not constitute significant change.

However, the AI Regulation is still a draft, and it will need to pass through the European legislative process – this includes a review by the European Parliament, which has previously voiced the need for broad regulation, as well as the Member States. Given the degree of interest shown in the AI Regulation even before its publication, that legislative process is likely to be protracted. We expect inter-institutional negotiations to finalise the text will take between 18 and 24 months, and the regulation could theoretically apply as from early/mid 2024.

We expect considerable debate in the European Parliament as to which committee takes the lead on the proposal, given that many have prepared reports to guide the future legislation. MEPs are likely to seek to toughen the proposal, including likely pushback on the exceptions provided to law enforcement to deploy prohibited uses and the fact that quality management and conformity assessment procedures are only needed for high-risk AI systems. In addition, there is broad scepticism with regard to the creation of another body (the European Artificial Intelligence Board) that could wield material power in deciding what gets added to or taken out of the high-risk and the prohibitions lists (especially when many consider that the European Data Protection Board could perform this function).

Beyond the AI Regulation, wide-ranging though it is, the EU is also considering how other aspects of emerging technologies such as AI should be regulated. For example, it remains to be seen whether proposals will follow to amend the rules governing businesses’ liability to consumers for harm caused by AI-enabled products.

What are the top points I should be thinking of today if…

I’m a provider or user of AI

  1. Get ready for the new regulation by assessing the likely impact of the proposal on your business and by developing mature AI governance frameworks.

  2. Engage with the EU institutions as the proposed regulation is examined and amended: the AI Regulation is still at an early stage of the legislative process and it is likely that Member States in Council and MEPs will be actively seeking input from stakeholders. This could be done individually, or via trade associations, a number of which have already been actively working on the Commission’s AI work streams. These include DIGITALEUROPE, DOT Europe, MedTech Europe, EuroCommerce and AmCham EU, to name a few.

  3. Monitor the development of this regulation, and related changes in areas such as liability, in the months ahead.

I’m investing in AI

  1. Assess which risk category any target AI systems would fall into and whether there is a risk that these systems shift between risk categories with future technological advances or regulatory amendments.

  2. Understand the extent to which a target business complies (or can easily be made compliant) with likely future regulatory requirements, in the same way that preparedness for GDPR was assessed in the past. Consider, in particular, whether AI systems are so deeply integrated into applications that they will be difficult to adapt to fit with future regulation.

  3. The EU believes development and commercialisation of AI will be driven by public trust. Assess whether the target is at a level where it could promote and explain the trustworthiness of its AI.

  4. Diligence whether any target AI systems are built on third party component AI systems, models or datasets – and test whether the business has appropriate licences to use them.

  5. Consider the global direction of regulatory travel: assess where the target operates its AI systems and consider whether other jurisdictions will pass similarly strict regulation. EU officials say Japan and Canada are already taking a close look at its proposal.

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