The task was challenging and significant, yet indispensable.
Following an exhaustive 38-hour discussion, policymakers arrived at a preliminary agreement on the initial step to oversee the use of artificial intelligence (AI), as communicated by Brando Benifei, an Italian member of the European Parliament.
The AI Act is designed to set a global standard for AI deployment, tackle structural issues in the European market, uphold democracy and human rights—all while promoting innovation. Any entity operating within the Eurozone will need to comply with this regulation, regardless of its physical presence.
Initially introduced by the European Commission nearly two years ago, the framework now takes a risk-focused approach, classifying AI applications into four levels based on their potential risks. Breaches of the rules come with significant penalties, amounting to up to 7% of global revenue for the most severe violations.
Actions labeled as “unacceptable” that pose risks to health, employment, or human rights are strictly forbidden. Rigorous protocols, including compulsory evaluations of fundamental rights for the insurance and banking sectors, could be enforced on “high-risk” AI systems, which are integral to both private and public services like credit assessment. Companies will be mandated to reveal interactions involving automated systems to clients and specify AI-generated content for “lower-risk” functions such as chatbots.
The proposed scheme has sparked varied reactions, with certain European tech companies and European President Emmanuel Macron criticizing it for being overly restrictive and potentially impeding technological advancement. The final decision still lies with the European Parliament and Council to incorporate it into EU legislation, but the framework remains open to modifications. It is anticipated that businesses will start experiencing its effects from the upcoming year until 2026. Whatever unfolds is likely to have a significant impact. The recent discussion in the US regarding the coexistence of AI technology and regulatory measures was analyzed by Scott Zoldi, FICO’s chief analytics officer and a risk assessment expert, last month. Zoldi mentioned, “We are closely monitoring developments in the EU.”
