Europe Clamps Down The AI Act, Europe's biggest AI law, moves closer to approval.

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Europe Clamps Down: The AI Act, Europe's biggest AI law, moves closer to approval.

Europe’s sweeping AI law moved decisively toward approval.

What’s new: After years of debate, representatives of the European Union’s legislative and executive branches agreed on a draft of the AI Act, a comprehensive approach to regulating AI. As the legislative session drew to a close, the representatives negotiated nearly nonstop to approve the bill before the deadline. It will return to Europe’s parliament and member countries for final approval in spring 2024 and take effect roughly two years later.

How it works: The framework limits uses of AI that are considered especially risky. Last-minute agreements lightened the burdens on small companies and open source development. It includes the following provisions:

  • The AI Act does not apply to (i) systems intended solely for research, (ii) systems outside the purview of EU law such as member states’ militaries and security apparatus, and (iii) law enforcement agencies. Developers of free and open source models are exempt from some requirements as specified below.
  • The bill bans certain AI applications under particular circumstances, including predictive policing, scraping of face images without a specific target, emotion recognition in workplaces or schools, rating the trustworthiness or social standing of individuals to determine risk of default or fraud, and use of biometric data to infer sensitive demographic information such as religion or sexual orientation.
  • AI systems used in designated high-risk areas like biometric identification, border control, education, employment, infrastructure, justice, and public services face special scrutiny. Developers must conduct safety assessments and provide detailed proof of safety. The burden is somewhat lighter for small and medium-sized companies, whose fees are proportionate to their size and market share. Small and medium-sized businesses also have access to so-called “regulatory sandboxes,” deployment environments in which regulatory costs are waived altogether in exchange for increased supervision.
  • Developers of general-purpose artificial intelligence (GPAI), defined as models that can be used for many different tasks, must report the procedures and data they used to train their models. Free and open-source models are exempt from these requirements. All models must comply with EU copyright laws.
  • Prior to being made widely available, GPAI models that pose “systemic risks” must report energy consumption, fine-tuning data, risks, security testing, and security incidents. (What distinguishes a model that poses “systemic risks” from one that doesn’t is unclear.) Free and open-source models are not exempt from these requirements. 
  • All AI-generated media must be clearly labeled.
  • The bill sets multi-million-euro fines for companies that violate its terms. Startups and small companies will be charged smaller fines for violations.
  • A new AI Office within the EU’s executive branch will oversee GPAI models and create standards and testing practices. An independent panel of scientists will advise the AI Office. An AI Board consisting of representatives from each EU member state will advise the AI Office and transmit its decisions to member states.

What’s next: The representatives have agreed on these broad strokes, but they will continue to revise the details. After further vetting, the European Parliament will vote again, and a council of deputies from each EU member state will also vote, most likely in early 2024. If both bodies approve the bill, it will take effect no later than 2026.

Behind the news: The AI Act has been under construction since 2021. The technology has evolved significantly since then, and the proposal has undergone several revisions to keep pace. The advent of ChatGPT prompted a round of revisions to control foundation models. Negotiations reached fever pitch in late December. France, Germany, and Italy, seeking to protect developers in their countries, sought to weaken restrictions on foundation models. They were opposed by Spain, which sought to strengthen oversight of the most powerful foundation models. The final negotiations concerned exceptions for police and military use of AI within member states. France led a group of countries that pushed for greater military exemptions.

Why it matters: The AI Act is the broadest and most detailed effort to regulate AI to date. The stakes are high: Not only does Europe have a budding AI industry of its own, but EU laws often dictate companies’ practices outside the union. Yet the bill won’t take effect for years — when AI may present very different challenges.

We’re thinking: Effective regulation should mitigate harm without stifling innovation. The best approach is to regulate applications rather than underlying technology such as foundation models. While the EU restricts some applications in helpful ways, it also limits foundational technology in ways that we expect will hurt innovation in EU member states. We welcome the provisions added at the last moment to lighten the load on small companies and open source developers. These 11th-hour wins reflect the efforts of many people who pushed to protect innovation and openness.


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