🌊 EU vs AI - number 1 in regulation, last in?

EU decided to do what they do best...

Nino Pavicic

Dec 12, 2023

Hi all,

aaaaaannddd

(please don’t unsubscribe 😂😂😂)

To start this week we’ll talk about something that needs to be talked about 👇

AI regulation

Ever since ChatGPT showed its promise there has been a lot of talk about whether the AI will completely replace humans and whether the world will look something like this 👀

So naturally, as world saviors, the EU decided to do what they do best…to write laws and regulations so that we could all be safe 😍😍😍

However…

What exactly is EU regulating 🤔

Let’s try to find it out!

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Ok, now that we got formalities out of the way, let’s move on!

EU regulation explained

Now, the whole thing started back in April 2021 when the EU AI Act was first proposed. This act is one of the first comprehensive legal frameworks for AI globally.

Full text of 2021 act you can read HERE

(it’s a slow read let me warn you in advance)

However, what is the point of a newsletter if I don’t summarize the act 😂

Here are some key aspects of the EU AI Act:

Risk-Based Approach: The EU AI Act categorizes AI systems based on the level of risk they pose. These categories range from "unacceptable risk" (banned practices), "high risk," "limited risk," to "minimal risk."
Banned Practices: The act identifies certain AI practices as unacceptable due to their detrimental impact on fundamental rights. This includes AI systems that manipulate human behavior to circumvent users' free will and systems that allow 'social scoring' by governments.
High-Risk AI Systems: For AI systems classified as high-risk (e.g., those used in critical infrastructure, employment, essential private and public services, law enforcement, migration, asylum and border control management), the act sets strict requirements. These include adequate risk assessment and mitigation systems, high-quality datasets to train AI, transparency measures, and human oversight.
Conformity Assessments: High-risk AI systems must undergo rigorous testing and certification to ensure compliance with the act's requirements before being put on the market.
Transparency Obligations: AI systems intended to interact with humans, those used to detect emotions or determine association with (social) categories based on biometrics, and AI-enabled chatbots must be designed to inform users that they are interacting with an AI system.
Enforcement and Penalties: The act provides for enforcement mechanisms, including penalties for non-compliance. Penalties for non-compliance can be substantial, potentially reaching up to 6% of a company's annual global turnover.
Data Governance: The act emphasizes the importance of using high-quality data sets, minimizing biases, and ensuring that AI systems do not discriminate.
International Impact: While the act is specific to the EU, its impact is expected to be global, as non-EU companies doing business in the EU will also need to comply.

So, all this was proposed back in 2021 but the ChatGPT craze made the Europen Commission work even harder (bless them), and on December 9th, 2023 they finally reached the final version of the EU AI Act.

Compared to the initial Commission proposal, the main new elements of the provisional agreement can be summarised as follows:

rules on high-impact general-purpose AI models that can cause systemic risk in the future, as well as on high-risk AI systems
a revised system of governance with some enforcement powers at EU level
extension of the list of prohibitions but with the possibility to use remote biometric identification by law enforcement authorities in public spaces, subject to safeguards
better protection of rights through the obligation for deployers of high-risk AI systems to conduct a fundamental rights impact assessment prior to putting an AI system into use.

What common people want to really know is “Will I be able to use ChatGPT”

Yes you will if ChatGPT “plays by the rules”

Specific rules have been also agreed for foundation models, large systems capable to competently perform a wide range of distinctive tasks, such as generating video, text, images, conversing in lateral language, computing, or generating computer code. The provisional agreement provides that foundation models must comply with specific transparency obligations before they are placed in the market. A stricter regime was introduced for ‘high impact’ foundation models. These are foundation models trained with large amount of data and with advanced complexity, capabilities, and performance well above the average, which can disseminate systemic risks along the value chain.

Also, EU is taking care of the innovation as well 👌

Notably, it has been clarified that AI regulatory sandboxes, which are supposed to establish a controlled environment for the development, testing and validation of innovative AI systems, should also allow for testing of innovative AI systems in real world conditions. Furthermore, new provisions have been added allowing testing of AI systems in real world conditions, under specific conditions and safeguards. To alleviate the administrative burden for smaller companies, the provisional agreement includes a list of actions to be undertaken to support such operators and provides for some limited and clearly specified derogations.

In a nutshell, the EU wants to make sure that the current AI solutions are regulated but also that the new AI solutions will be transparent and safe to use.

However…

Will all of this increase EU-based AI solutions?

Status of the AI in the EU

Back in September 2022, McKinsey published a really interesting report called “Securing Europe’s competitiveness” where they are addressing Europe’s technology gap when compared to other parts of the world.

The full report you can download HERE, and yes, it’s free 💸💸💸

Now, McKinsey in this 124 page long report talks about many areas (not just tech), and one of the areas is AI.

The thing about AI (which people leading Europe most likely don’t understand) is that there are many connected industries to it, and many connected skill sets.

For instance, you can’t have top-notch AI startups without people skilled in data, cloud engineering etc because AI needs all of those.

Take a look at how “good” Europe is in “up and coming” competences 👇