Europe’s Lawmakers Have Been Working Hard On AI Regulation

Europe’s Lawmakers Have Been Working Hard On AI Regulation
Theodora Lee Joseph, CFA

3 months ago2 mins

Mentioned in story

What’s going on here?

After working – read: arguing – until the early hours, European lawmakers agreed on a handful of provisional AI regulatory rules.

What does this mean?

Despite what the name would have you believe, the “AI Act” isn’t a student production depicting a rogue robot masquerading as a human. Instead, it’s a broad set of rules designed by the European Union to regulate AI. Under the proposed plan, developers like OpenAI would need to record their training methods, log all copyrighted material used, and add disclaimers to any AI-generated content that reaches the real world. Crucially, any systems powerful enough to pose a risk to society at large would be held to strict industry guidelines, and would have to report any unsavory occurrences to the European Commission. Policymakers are hoping to receive the approval stamp before the European elections in June, a bid to avoid the delay that inevitably comes with a reshuffle of parliament. If that happens, the act will mark the first set of formal AI rules to grace the Western world.

AI Act framework
AI Act framework

Why should I care?

For markets: Let’s get up to speed.

AI developers kicked into high gear this year, determined to keep up with ChatGPT-creator OpenAI. So not only are policymakers playing catch up, but they also have to tread a difficult line: safeguarding the technology’s downside without stifling its potential upside. It doesn’t help that the digital realm tends to be a divisive and perplexing topic in the traditional mahogany walls of government.

Zooming out: The not-so-golden rules.

Regulation could be the difference between a utopia free of ailments and back-breaking work, and a dystopia fraught with misinformation, more powerful wrongdoers, and automated attacks. But for AI companies, it’s a downer. Just look at C3.ai: the California-based company blamed potential customer firms’ increasingly stringent precautions for its worse-than-expected revenue last quarter and deepening losses for the year as a whole.

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