On May 21st, 2024, the European Council approved a groundbreaking law aimed at harmonizing rules on artificial intelligence (the AI Act). This legislation represents the first of its kind in the world and may set a global standard for AI regulation. The objective of the Act is to foster the development and implementation of reliable AI systems across the EU’s single market, by both public and private sectors. Additionally, the Act aims to ensure the protection of fundamental rights of citizens across the EU and to stimulate investment and innovation in artificial intelligence in Europe.

The adoption of this Act represents a significant milestone for the European Union:

• It is the first legislation of its kind in the world.
• It applies only to areas within EU law and provides exemptions for systems used for military, defense, and research purposes.
• With this Act, Europe emphasizes the importance of trust, transparency, and accountability in dealing with new technologies, while also allowing for the encouragement of innovation.

Classification of AI Systems: The new AI Act classifies different types of artificial intelligence according to risk. AI systems such as cognitive behavioral manipulation or predictive policing will be banned in the EU due to their unacceptable risk.

To ensure proper enforcement, several governing bodies are established:

• An AI Office within the Commission to enforce common rules across the European Union.
• A team of independent researchers and scientists to support enforcement activities.
• An AI Board with representatives from member states to advise and assist the Commission and member states in the consistent and effective application of the AI Act.
• An advisory forum for stakeholders to provide technical expertise.

Penalties: The fines for violations of the AI Act are determined as a percentage of the offending company’s global annual turnover in the previous financial year. Small and medium-sized enterprises (SMEs) and startups are subject to proportional administrative fines.

Transparency and Protection of Fundamental Rights: Before a high-risk AI system is implemented by entities providing public services, a fundamental rights impact assessment must be conducted. High-risk AI systems and their users must be registered in the EU database for high-risk systems.

Measures to Support Innovation: The AI Act provides a legal framework that supports innovation and aims to promote evidence-based regulatory learning.

Next Steps: After being signed by the presidents of the European Parliament and the Council, the legislative act will be published in the EU’s Official Journal in the coming days and will enter into force twenty days after this publication. The new regulation will apply two years after its entry into force, with some exceptions for specific provisions.