In early December 2023, the European Council and European Parliament reached a provisional agreement on the EU’s new AI Act, marking a significant milestone in the regulation of artificial intelligence. The leaked final text of the act has revealed its potential to become the global standard for AI regulation, prompting British businesses to keep up with these new standards.
Dubbed the Brussels Effect, the EU’s regulations have often become de facto global standards, as seen with the General Data Protection Regulation (GDPR). The GDPR, with its comprehensive data protection legislation, gained international recognition and influenced data protection regulations worldwide. The EU’s influence stems from its power and status, as well as its regulations’ extraterritorial reach.
The AI Act aims to extend this influence by applying its regulations to AI system providers and deployers regardless of their location. If the output produced by their AI system is meant to be used within the EU, compliance with the AI Act is mandatory. While there is still some ambiguity surrounding the interpretation of output, non-EU entities are likely to err on the side of caution and opt for compliance to navigate this uncertainty safely.
The AI Act categorizes AI systems based on their risk levels, with high-risk systems subject to stringent obligations. These obligations include adhering to data governance standards, maintaining transparency, and incorporating human oversight mechanisms. The global business community is likely to perceive alignment with these robust EU standards as advantageous due to the size of the EU market and the operational complexities of maintaining different standards across regions. Furthermore, these standards resonate with the prevailing global discourse on AI ethics, making them more than just regulatory requirements but also ethical benchmarks.
Brexit has created a unique situation for the UK, as its businesses and entities involved in AI activities will still be affected by the AI Act if they intend to operate within the EU market. It is highly likely that the UK’s domestic regulations will strive for alignment with the AI Act, considering its potential as a global standard. Businesses in both the EU and the UK are advised to prioritize early compliance rather than delaying until the last minute, drawing lessons from the implementation of the GDPR.
The implications of the AI Act for British companies depend on their industry and AI technology usage. However, certain factors will benefit all businesses, such as prioritizing clean and accurate datasets, incorporating human oversight in AI-driven processes, and testing for bias with necessary adjustments.
While other regions may adopt diverse AI compliance strategies, the EU’s significant regulatory influence, the scope of the AI Act, and its extraterritorial impact provisions point towards the potential for universal alignment. Similar to the profound impact of the GDPR, the EU’s AI Act is set to usher in a new era of global AI regulation and governance.
In summary, the EU’s AI Act holds the potential to set the global standard for AI regulation. British businesses operating within the EU market must stay ahead and prioritize compliance to benefit from the size of the EU market and avoid the complexities of maintaining different standards across regions. The AI Act’s emphasis on ethics and fundamental rights resonates with the global discourse on AI, making compliance more than just a regulatory requirement. As we await final confirmation of the AI Act, businesses are advised to learn from the GDPR implementation and strive for early compliance to avoid any last-minute rush.
