EU’s World-First Artificial Intelligence Act Takes Effect

Starting today, the European Union’s Artificial Intelligence Act (AI Act) comes into force, marking a shift in the regulation of artificial intelligence (AI) technologies within the EU.

The European AI Act is the first comprehensive law regulating artificial intelligence. Its primary goal is to ensure that AI used in the EU is trustworthy, safe, and respects fundamental human rights. It also aims to create a favorable environment for AI innovation and investment within the EU.

The Act categorizes AI systems based on their risk level:

• Minimal risk: AI like spam filters or recommendation systems pose little risk and are largely unregulated.
• Limited risk: AI like chatbots must be transparent about being AI and disclose when deepfakes or biometric data is used.
• High risk: AI used in critical areas like recruitment, loan approval, or autonomous robots face strict regulations, including data quality checks, human oversight, and cybersecurity measures.
• Unacceptable risk: AI that manipulates human behavior, social scoring, or certain biometric uses is outright banned.

European Commission President Ursula von der Leyen stated, “With our artificial intelligence act, we create new guardrails not only to protect people and their interests, but also to give business and innovators clear rules and certainty,” in a France 24 report.

Several advisory bodies will be established to support the enforcement process. The European Artificial Intelligence Board will ensure consistent application of the AI Act across EU countries and facilitate cooperation. A scientific panel will provide expert advice, including warnings about potential risks in general-purpose AI. Additionally, a stakeholder forum will offer input on the Act’s implementation.

Companies that violate the AI Act face substantial fines, with the most severe penalties for banned AI applications.

The majority of the AI Act’s rules will come into full effect on August 2, 2026. However, restrictions on high-risk AI systems will be implemented sooner. To prepare for full implementation, the EU Commission is encouraging voluntary adoption of the Act’s principles through the AI Pact.

Companies breaching the EU AI Act could face fines ranging from 35 million euros ($41 million) or 7% of their global annual revenues, whichever is higher, to 7.5 million euros or 1.5% of global annual revenues.

These fines are higher than those under the General Data Protection Regulation (GDPR), Europe’s strict digital privacy law, which imposes fines of up to 20 million euros or 4% of annual global turnover for breaches.

The AI Act serves as a model for other regions around the world to develop their own AI regulations.