The European Union weakened some provisions of its landmark AI Act and delayed others after businesses and policymakers argued the law made European companies less competitive.
What’s new: The European Parliament and member states agreed to amend the AI Act to delay restrictions that target applications the union considers to pose significant threats to safety, health, or individual rights, among other changes. The amendments await formal adoption by the union’s council and parliament. The EU characterized the amendments as “safer and simpler rules for both citizens and businesses.”
How it works: The amendments generally streamline the EU AI Office’s oversight and enforcement responsibilities. They also extend deadlines for AI developers to comply with certain provisions and simplify others.
- Requirements for AI systems deemed to be “high-risk” — including those used in law enforcement, critical infrastructure, employment, migration, and personal identification — are delayed to December 2027 from a previous deadline of August 2026. They would give developers until August 2027 to implement supervised sandbox environments to isolate new models from the wider world during testing. They would also extend deadlines for AI-driven products including machinery and toys until August 2028 and for watermarking of AI generated output and other transparency requirements to around December 2026.
- The revisions would adjust the ways personal data can be used in training and deployment of AI systems. Under existing EU law, some categories of personal data can be used only when “strictly necessary.” The revisions would allow for personal data to be used to detect and mitigate bias.
- They also carved out or clarified exemptions for some products. For instance, the AI Act would not affect industrial machinery, which is already regulated by product-safety laws. Further, lighter compliance requirements and administrative burdens would apply in some cases to smaller companies (fewer than 50 employees with either annual worldwide revenue up to €10 million or total assets up to €10 million) and “small mid-cap” companies (roughly between 250 and 749 employees with either annual worldwide revenue up to €150 million or total assets up to €129 million).
- The amendments strengthen the AI Act in one notable area: They ban generation of sexually explicit images of children and non-consensual nude images of real people.
Behind the news: In 2024, the EU passed the world's most stringent law to regulate AI. The law entered into force the same year, with certain provisions to be phased in over subsequent years. It was criticized as imposing unreasonable burdens without improving safety virtually from the moment the legislative process began.
- In 2023, executives at 163 companies signed a letter that argued the legislation was “bureaucratic.” In 2025, 110 companies urged policymakers to postpone the implementation timeline writing because the regulations were “unclear, overlapping and increasingly complex.” Companies such as German industrial and software firms Siemens and SAP lobbied for revisions, saying that regulations were holding them back.
- Two early reports influenced the amendments. A report published in April 2024 by Enrico Letta, Italy’s former Prime Minister, argued that the EU was fragmented into 27 national markets that prevented European firms from scaling the way American and Chinese companies can. A September 2024 report about Europe’s competitiveness framed the region’s stagnating GDP growth as an “existential challenge” and focused on closing the innovation gap, decarbonization, and reducing dependencies.
- In early 2025, the European Commission — the executive arm of the EU — announced its intention to reduce regulatory burdens, simplify rules, and boost economic competitiveness.
- In February 2026, the European Commission withdrew its proposed AI Liability Directive, a controversial proposed law, separate from the AI Act, that would have introduced EU-wide standards for lawsuits over AI-induced harms.
The public responds: Immediate reaction to the amendments was mixed. The AI industry generally welcomed the added flexibility while consumer groups expressed concern over the potential weakening of safety standards. Some media reports framed them as watering down the law to appease business interests. The European Consumer Organization said the deal makes the digital environment less safe and creates dangerous loopholes for AI companies.
Why it matters: In both its original and updated forms, the AI Act aims to mitigate AI-induced “systemic risks,” a concept borrowed from finance and infrastructure regulation that refers to failures capable of rippling across industries or large parts of the economy. The idea that AI poses systemic risks remains speculative, whereas overregulation poses the economic risk of stifling innovation and blocking beneficial technology. The revisions aim to balance risks and benefits by easing burdens on developers, giving companies additional runway to understand and comply with requirements, and clearing the way for ongoing innovation in critical industries such as manufacturing and semiconductors.
We’re thinking: Many provisions of the original AI Act were unclear, overly broad, or unnecessarily burdensome. These revisions appear to make the law less burdensome while retaining helpful elements. This is a good step for European competitiveness.