The EU’s proposed AI Act raised concerns in the digital community and met an outcry from approximately 160 executives of Europe’s largest companies due to its potential hindrance to AI advancements.
These concerns were voiced out in an open letter to Europe’s institutions discussing the potential stifling effect of the overly-strict regulation on artificial intelligence – fearing that the Act might hinder technological advancements and ruin these companies’ competitiveness.
Corresponding to the launch of ChatGPT worldwide, the EU agreed on a set of rules to regulate AI earlier this year. Behind the regulation came the European’s fear of the AI’s impact on their personal life and data privacy – the rules on this Act targets generative AI and foundation models, which both serve as bases for AI chatbots.
Consequently, investors and companies became weary of the Act’s consequences for competitiveness on a global scale.
In recent reports, the current draft of the Act is touted as the toughest set of global rules, and negotiation positions are now being established between member states and the European Commission.
The companies, including Airbus, Siemens, and Renault, warn that the proposed legislation would risk an interference with investment in AI development within Europe, leading to a productivity gap compared to the US.
The rules to be established in this law might put European start-ups out of competition and create a “critical productivity gap.”
In case a company disobeys this law, it could cost them up to $43 million or 7% of the company’s annual revenue, depending on which one is higher. These high compliance and liability costs will certainly push innovative ideas away.
Signatories on the open letter said that potential investors and start-ups will leave the EU to not be tied to strict regulations and move their revenue to countries where the market is more open and less supervised.
A member of the European Parliament, Dragoș Tudorache, responded to the letter, indicating that the signatories missed part of the text and are reacting “aggressive[ly].”
Furthermore, he pointed out that the letter only suggests what the European Parliament is already considering – standards defined through industry-led process and governance, and a regulatory scheme that focuses on transparency.
From another perspective, representative for the letter, Jeannette zu Fürstenberg, stated in a release that the AI’s forthcoming revolution “will substantially influence the destiny of all continents.”
Upon their deliberation over Europe’s deficiency in technological leadership, they took this alarming time to take action and voice out their concerns against the AI Act, especially having a high possibility of having “disastrous implications for the competitiveness of Europe.”
However, it should also be mentioned that not all European VCs push back on the initiative. In this case, Digital Europe, a big trade association, did not speak out against the regulation and said that it is “a text we can work with.” Later on, they clarified that there are still areas which can be improved on to ensure that Europe “becomes a competitive hub for AI innovation.”
The looming AI legislation proposed by the EU is provoking reactions, from alarm and resistance to acceptance. Top companies and executives warn about the potential catastrophic implications for tech and AI advancement and Europe's competitiveness.
Once the act is signed and technology progresses, we will see who will be proven right.