The new EU AI Act came into force on 1 August 2024. The legislation governs the regulation of AI technologies and ensures they are used ethically and transparently. Here, we discuss the new EU AI Act, including what impact it is likely to have and the opinions of industry leaders.
New EU AI Act Launched to Govern and Regulate AI Technologies
The new EU AI Act is the first major piece of legislation governing the use of AI technologies in Europe. The AI laws categorise different types of AI technologies into different risk classifications. Depending on the classification, varying obligations are imposed on businesses to ensure the protection of users.
Technologies deemed to pose an “unacceptable” risk will be banned outright from February 2025. These will include biometric categorisation systems and emotion recognition technology in the workplace. For AI technologies in the higher risk classifications, businesses must conduct audits, implement stringent risk management frameworks, and comply with various standards and guidelines.
In the spirit of transparency and accountability, businesses must disclose the nature and functionality of AI technologies to users.
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In terms of applicability, the new EU AI Act is primarily aimed at businesses based within the EU. However, the AI laws have an extraterritorial reach, meaning that they apply to any AI technologies intended for use in the EU. As such, UK businesses which sell into the EU market will also be required to comply with the new EU AI Act.
The new EU AI Act also contains significant punitive measures for businesses which fail to comply with its requirements. Non-compliance can result in a fine of up to €30 million or 7% of a business’s global annual revenue.
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What Will the Impact of the New EU AI Act Be?
For businesses operating in the EU, the impact of the new AI Act is likely to be a combination of the challenging and the rewarding. The obligations imposed by the EU AI regulations are guaranteed to raise issues for some businesses. For those currently using AI technologies categorised as high risk, ensuring compliance may be costly and time-consuming. However, it is hoped that the ultimate benefits, including minimising risks and enhancing customer trust, will prove worthwhile.
Implementation of the new EU AI Act will be staggered, effectively providing businesses with more time to ensure compliance. However, it will be essential for businesses to act quickly to avoid falling foul of the EU AI regulations. Evaluating current systems, assessing risk levels, and potentially replacing certain high-risk technologies are likely to be important steps for achieving compliance. Ensuring ongoing monitoring will be similarly crucial to prevent future issues.
Impact of the New Artificial Intelligence Act on HR
HR leaders are often responsible for implementing and overseeing the operation of AI technologies in the workplace. And so, certain elements of the new EU AI Act will be of particular relevance to HR departments.
AI technologies which have a significant impact on people’s lives are automatically categorised as high risk under the new EU AI Act. These will include technologies used in employment processes, as well as those in critical infrastructure and healthcare. HR leaders will need to ensure that the technologies meet specific criteria and that stringent obligations are being applied to high-risk technologies.
Certain areas will be especially noteworthy to HR departments when assessing their HR practices. These include minimising bias, encouraging inclusive communication, and ensuring transparency in AI technologies. Conducting audits of technologies, mitigating risks, and implementing transparent policies for AI usage are just a few ways in which HR teams can prepare for the AI laws.
Ensuring continuous monitoring, including third-party input, and staying abreast of legislative developments will also prove invaluable for ongoing compliance.
Industry Leaders Say EU AI Regulations Could Be Good for Business
Despite the compliance requirements imposed by the new EU AI Act, many businesses are optimistic about its ultimate effects. Some are viewing the AI laws as an opportunity to gain a competitive advantage over other businesses.
One such supporter of the new EU AI Act is Nikolaz Foucaud, managing director of online learning platform Coursera. He sees the introduction of the new AI laws as a positive step towards AI governance. He has highlighted the potential effects for businesses, stating “Transparent and responsible AI development can serve as a competitive differentiator.”
Similarly, CEO of Rapport and Speech Graphics, Gregor Hofer, is focusing on the opportunities which the AI laws offer. He says, “For startups and SMEs like us, the tiered risk approach means we can innovate rapidly in lower-risk areas while focusing our compliance efforts where it matters most. The proposed AI regulatory sandboxes are particularly promising, offering a safe space to test cutting-edge applications.”
Evolution Will Be the Key
Some business leaders feel that, whilst the new EU AI Act provides a level of guidance, these will need to adapt alongside the technologies they regulate to prove effective. In the words of GoTo’s David Evans, “This law is not the end of AI innovation, but rather the start of a journey towards better governance that will balance efficiency with essential safeguards.”
Others have highlighted the importance of businesses embracing and implementing the new AI laws. Reassessing their AI practices and being prepared for change will, they say, be crucial.
READ: UK AI Regulation: TUC’s Proposed Bill and Its Impact on Employment Rights
Luminance CEO, Eleanor Lightbody, is a little more cautious in her optimism regarding the new EU AI Act. Given the vast range of AI technologies available and the rapid pace at which these evolve, she has warned that a singular system of regulation may prove ineffective.
“A one-size-fits-all approach to AI regulation risks being rigid and given the pace of AI development, quickly outdated,” she states. She further adds, “Only by striking the right balance between innovation, regulation and collaboration can the UK maintain its long heritage of technological brilliance.”