The EU AI Act and its global impact.

April 21, 2021. the European Commission has published a proposal for a regulation, that establishes harmonized rules for artificial intelligence (EU AI Act). The EU AI Act is currently under discussion by the European Parliament and the Council of Ministers. The new regulation will enter into force on the 20th day following its publication in the Official Journal of the European Union. It will apply 24 months after that date. The objectives of the EU AI Act are to:

(a) facilitate the development of a single market for lawful, safe, and trustworthy AI applications and prevent market fragmentation;

(b) guarantee legal certainty to facilitate investment and innovation in AI;

(c) enhance governance and effective enforcement of existing law on fundamental rights and safety requirements applicable to AI systems;

(d) safeguard and respect existing law on fundamental rights and European values.

Although European Union regulations apply in the Member States, its impact will not stop at the EU’s borders. The EU AI Act is intended to apply to:

(i) providers placing on the market or putting into service AI systems in the EU, irrespective of whether they are established within the EU or in a third country;

(ii) users of AI systems located within the EU;

(iii) providers and users of AI systems located outside of the EU, where the output produced by the system is used in the EU.

Brussels effect”

Some people believe, that EU AI Act will be the next example of the “Brussels effect”. That concept was coined in 2012 by Professor Anu Bradford of Columbia Law School – based on a similar phenomenon in the USA (California’s effect). What is actually that effect? She describes it in her book as follows: “The Brussels Effect refers to the EU’s unilateral power to regulate global markets. Without the need to resort to international institutions or seek other nations’ cooperation, the EU has the unique ability among nations today to promulgate regulations that shape the global business environment, elevating standards worldwide and leading to a notable Europeanization of many important aspects of global commerce”.

The best example of the Brussels effect was the European Union’s data protection regulations. The EU’s General Data Protection Regulation (GDPR) entered into force on 24 May 2016 and applies since 25 May 2018. The largest companies in the USA responded immediately. In May 2018 Microsoft announced that:” The company will extend the rights that are at the heart of GDPR to all of Microsoft’s consumer customers worldwide”. Earlier, also Facebook announced the partial implementation of GDPR. Will this situation be repeated in the case of the EU AI Act?

“The question that every firm in Silicon Valley will be asking today is, Should we remove Europe from our maps or not?” this is how commented on the impact of the EU AI Act on business Andre Franca, the director of applied data science at CausaLens, a British A.I. startup. There is no doubt, that EU AI Act will impose significant obligations impacting businesses all over the world. It looks like compliance in this area will be a mandatory element for virtually every company. You should think about it right now!

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