EU’s AI Act Comes into Force 🤖

Hey there! 👋

The EU’s Artificial Intelligence Act just kicked in on August 1st. It’s the world’s first legal framework for regulating AI and it’s going to shake things up globally. Let’s dive into what this means for businesses using AI and what roles law firms may play.

Don't have time for the full scoop? No worries, we've got you covered with a quick summary: click here

At its heart, the AI Act introduces a risk-based approach to AI regulation. Picture it as a sophisticated sorting system for AI technologies.

😡 Unacceptable risk: The act outright bans AI practices that are considered a clear threat to people’s fundamental rights, such as social scoring systems, or AI systems that manipulate human behaviour.

😰 High risk: AI systems in this category are ‘high-risk’ and are required to comply with strict requirements before being put on the market.

😑 Limited risk: AI systems such as generative AI chatbots must be transparent enough to ensure that individuals are informed that they are interacting with AI. For example, a deep fake AI must be clearly labelled as AI-generated.

🙂 Minimal risk: There are no restrictions for this category of AI systems. This includes AI-enabled video games and spam filters. Most AI systems currently used fall into this category.

What makes this Act particularly intriguing is that it doesn’t just apply to EU-based companies; any business whose AI system touches EU soil (even digitally) falls under its jurisdiction.

How can this affect businesses? 📈

• Firstly, businesses would need to assess their AI systems and categorise themselves according to the Act’s risk levels. Therefore, businesses developing or deploying AI systems will face increased compliance costs. As high-risk AI systems will face strict requirements, they will be most affected.

• The Act’s broad reach means that even businesses outside the EU must comply if their AI systems are marketed or intended to be used in the EU. This global impact could reshape international AI development and deployment strategies, with the EU standards potentially becoming the global benchmark.

• While the regulations aim to create a safe and trustworthy AI environment, they may also slow down innovation and market entry for smaller companies and startups due to the regulatory burden.

• The penalties for non-compliance with the EU’s AI Act are major and can have a big impact on a business. The fines range from 7.5 million to 35 million, or 1% or 7%, depending on the risk category.

How could a law firm be involved?👩‍⚖️

• Risk assessment: Lawyers will assist businesses in categorising their AI systems according to the act’s risk levels and determine what requirements apply.

• Regulatory Compliance: Teams specialising in regulatory compliance would assist businesses in understanding the Act’s requirements and applying them to their AI systems. This will be particularly important for businesses dealing with high-risk AI, which will face the most stringent regulations.

• Disputes: When disputes arise lawyers may find themselves defending companies against non-compliance allegations, including cases related to breaches of the new regulations.

• Lawyers may assist in drafting and reviewing contracts, especially those involving the procurement and deployment of AI technologies, ensuring