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  • Writer's pictureDonnovan Andrews

How the EU’s Proposed AI Act Could Empower the Leaders in Big Tech

Updated: Dec 6, 2023





The European Union is on the verge of establishing a landmark in artificial intelligence (AI) regulation with its proposed AI Act. This act is poised to become the world’s first comprehensive legal framework governing AI, marking a significant step beyond the less defined AI guidelines currently in place in the U.S.


Big U.S. Tech Companies: Potential Beneficiaries of the AI Act

The next meeting to confirm this AI Act is scheduled for December 6, oddly enough could spell good news for major U.S. technology companies like Microsoft, Google, and Amazon. Contrary to stifling AI innovation, the act’s stringent regulations could cement the dominance of these tech giants. The act proposes a regulatory approach that balances innovation with oversight, particularly focusing on advanced AI systems known as foundation models. However, the regulations are expected to impose heavier costs, that will potentially disadvantage smaller start-ups.


The "Brussels Effect" and Its Impact on Global AI Standards

The EU’s regulatory approach often sets a global standard, as seen with its General Data Protection Regulation (GDPR). This phenomenon, known as the "Brussels Effect," suggests that U.S. tech companies will likely adapt their AI models to meet EU standards, which could then become the de facto global norm.

A significant point of debate within the EU centers on whether regulation should target foundation models or be applied more specifically to AI applications like chatbots or image generators – think Chat GPT, Dall-E and others... Some European nations argue for the latter. This debate is critical as it may impact European AI start-ups, potentially placing them at a disadvantage compared to their larger U.S. counterparts.


The Potential Impact on European Start-Ups

European venture capital investors express concerns that stringent regulation on foundation models could stifle local AI start-ups, making it challenging for them to compete with U.S.-based tech giants. The heavy financial requirements for compliance could disproportionately affect smaller companies that lack the vast resources of established tech firms.


Big Tech’s Advantage in the AI Race

The proposed AI Act could further solidify the leading position of large tech companies in the AI space. Their financial strength enables them to bear the costs of compliance, including licensing data and monitoring regulatory adherence. This scenario could perpetuate their dominance in AI, given their head start, resources, and control over major cloud infrastructures.


The Balancing Act: Risk vs. Competition in AI Regulation

Navigating the complex landscape of regulation has the EU walking a fine line. They have to play the role of judge, referee, and adjudicator. In one corner they have global tech giants and in the other fledgling European startups – and somehow, they have they have to make it a fair fight.


The decisions shaping AI regulations hold far-reaching implications, extending beyond Europe's borders to influence the global trajectory of AI governance. This delicate balancing act illustrates the intricate dance between technological advancement, competitive dynamics, and and ethical AI practices.

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