European Companies Slam The EU’s Incoming AI Regulations

The European Union’s recently approved artificial intelligence legislation, however, has drawn widespread criticism from some of the largest firms in the continent, who contend that the Artificial Intelligence Act is inefficient and may harm competition. Over 150 executives from firms like Renault, Heineken, Airbus, and Siemens criticized the AI Act for its potential to “jeopardize Europe’s competitiveness and technological sovereignty” in an open letter sent to the European Parliament, Commission, and member states on Friday. The Financial Times was the first to report the letter.

Following two years of establishing its regulations and broadening them to cover recent AI advancements like large language AI models (LLMs) and foundation models, including OpenAI’s GPT-4, the European Parliament approved a draft of the AI Act on June 14. The final inter-institutional negotiations are anticipated to be concluded later this year, but there are still a number of phases before the new law may go into effect.

According to the open letter’s signatories, the current version of the AI Act could stifle Europe’s ability to “rejoin the technological avant-garde” through the use of AI technology. They contend that the agreed regulations are excessive and run the risk of damaging the bloc’s technological aspirations rather than creating an atmosphere that is conducive to AI innovation.

The legislation’s stringent regulations that especially target generative AI systems, a subset of AI models that normally come under the “foundation model” category, are one of the main issues raised by corporations. Regardless of the intended purpose, foundation AI model providers will be required by the AI Act to register their products with the EU, submit to risk assessments, and adhere to transparency standards. For example, they will need to make any copyrighted data they used to train their models publicly available. 

According to the open letter, companies creating these foundational AI systems would face excessive compliance costs and liability concerns, which would lead AI suppliers to completely leave the European market. The letter urged EU lawmakers to abandon their strict compliance requirements for generative AI models in favor of ones that may accommodate “broad principles in a risk-based approach,” stressing that “Europe cannot afford to remain on the sidelines.” 

“We have come to the conclusion that the EU AI Act, in its current form, has catastrophic implications for European competitiveness,” said Jeannette zu Fürstenberg, founding partner of La Famiglia VC, and one of the signatories on the letter. “There is a strong spirit of innovation that is being unlocked in Europe right now, with key European talent leaving US companies to develop technology in Europe. Regulation that unfairly burdens young, innovative companies puts this spirit of innovation in jeopardy.”

The companies also demanded that the EU create a regulatory body of AI experts to oversee how the AI Act can be implemented as technology advances.

“It is a pity that the aggressive lobby of a few are capturing other serious companies,” said Dragoș Tudorache, a Member of the European Parliament who led the development of the AI Act, in response to the letter.  The companies that have signed the letter, according to Tudorache, are doing so “on the stimulus of a few,” and the proposed EU law offers “an industry-led process for defining standards, governance with industry at the table, and a light regulatory regime that asks for transparency.” not another.”

In 2022, the company that created ChatGPT and Dall-E, OpenAI, lobbied the EU to alter an earlier version of the AI Act. It requested lawmakers to drop a proposed amendment that would have subjected all suppliers of general-purpose AI systems, a broad, nebulous category of AI that LLMs and foundation models can fall under, to the AI Act’s strictest regulations. In the end, the modification was never included in the finalized law.

Sam Altman, the CEO of OpenAI, earlier issued a warning that the company would leave the European market if it was unable to adhere to EU legislation. Altman also signed an open letter warning of the possible risks that future AI systems could bring. Later, Altman changed his mind and declared that OpenAI has “no plans to leave.”