Next Week Marks the Beginning of a New Era for AI Regulations as the EU AI Act Takes Effect
Next week marks the beginning of a new era for AI regulations as the first obligations of the EU AI Act take effect. While the full compliance requirements won’t come into force until mid-2025, the initial phase of the EU AI Act begins February 2nd and includes significant prohibitions on specific AI applications. Businesses across the globe that operate in the EU must now navigate a regulatory landscape with strict rules and high stakes.
Early Compliance Challenges
"It’s finally here," says Levent Ergin, Chief Strategist for Climate, Sustainability, and AI at Informatica. "While we’re still in a phased approach, businesses’ hard-earned preparations for the EU AI Act will now face the ultimate test."
Ergin highlights that even though most compliance requirements will not take effect until mid-2025, the early prohibitions set a decisive tone. "For businesses, the pressure in 2025 is twofold. They must demonstrate tangible ROI from AI investments while navigating challenges around data quality and regulatory uncertainty. It’s already the perfect storm, with 89% of large businesses in the EU reporting conflicting expectations for their generative AI initiatives. At the same time, 48% say technology limitations are a major barrier to moving AI pilots into production."
Ergin believes the key to compliance and success lies in data governance. "Without robust data foundations, organisations risk stagnation, limiting their ability to unlock AI’s full potential. After all, isn’t ensuring strong data governance a core principle that the EU AI Act is built upon?"
EU AI Act Has No Borders
The extraterritorial scope of the EU AI Act means non-EU organisations are assuredly not off the hook. As Marcus Evans, a partner at Norton Rose Fulbright, explains, the Act applies far beyond the EU’s borders.
"The AI Act will have a truly global application," says Evans. "That’s because it applies not only to organisations in the EU using AI or those providing, importing, or distributing AI to the EU market, but also AI provision and use where the output is used in the EU. So, for instance, a company using AI for recruitment in the EU – even if it is based elsewhere – would still be captured by these new rules."
Encouraging Responsible Innovation
The EU AI Act is being hailed as a milestone for responsible AI development. By prohibiting harmful practices and requiring transparency and accountability, the regulation seeks to balance innovation with ethical considerations.
"This framework is a pivotal step towards building a more responsible and sustainable future for artificial intelligence," says Beatriz Sanz Sáiz, AI Sector Leader at EY Global.
What’s Prohibited Under the EU AI Act?
To ensure compliance, businesses need to be crystal-clear on which activities fall under the EU AI Act’s strict prohibitions. The current list of prohibited activities includes:
- Harmful subliminal, manipulative, and deceptive techniques
- Harmful exploitation of vulnerabilities
- Unacceptable social scoring
- Individual crime risk assessment and prediction (with some exceptions)
- Untargeted scraping of internet or CCTV material to develop or expand facial recognition databases
- Emotion recognition in areas such as the workplace and education (with some exceptions)
- Biometric categorisation to infer sensitive categories (with some exceptions)
- Real-time remote biometric identification (RBI) in publicly accessible spaces for law enforcement purposes (with some exceptions)
A New Landscape for AI Regulations
The early implementation of the EU AI Act represents just the beginning of what is a remarkably complex and ambitious regulatory endeavour. As AI continues to play an increasingly pivotal role in business strategy, organisations must learn to navigate new rules and continuously adapt to future changes.
For now, businesses should focus on understanding the scope of their AI use, enhancing data governance, educating staff to build AI literacy, and adopting a proactive approach to compliance. By doing so, they can position themselves as leaders in a fast-evolving AI landscape and unlock the technology’s full potential while upholding ethical and legal standards.
Conclusion
The EU AI Act is a significant milestone in the development of AI regulations, and its implementation is expected to have far-reaching implications for businesses operating in the EU and beyond. As the regulatory landscape continues to evolve, it is crucial for organisations to stay informed and adapt to the changing rules and requirements. By doing so, they can ensure compliance, unlock the benefits of AI, and contribute to the development of a more responsible and sustainable AI ecosystem.
FAQs
Q: What is the EU AI Act?
A: The EU AI Act is a set of regulations aimed at ensuring the development and use of AI is safe, transparent, and human-centered.
Q: When does the EU AI Act take effect?
A: The initial phase of the EU AI Act begins February 2nd, with most compliance requirements not taking effect until mid-2025.
Q: What are the prohibited activities under the EU AI Act?
A: The current list of prohibited activities includes harmful subliminal, manipulative, and deceptive techniques, harmful exploitation of vulnerabilities, unacceptable social scoring, and more.
Q: How does the EU AI Act apply to non-EU organisations?
A: The EU AI Act applies not only to organisations in the EU using AI or those providing, importing, or distributing AI to the EU market, but also AI provision and use where the output is used in the EU.
