The European Union has officially begun enforcing its groundbreaking artificial intelligence (AI) law, marking a major step in global AI regulation. As of Sunday, companies must comply with strict new rules or face hefty penalties.
The EU AI Act, which took effect in August 2024, aims to regulate AI applications deemed risky to society. The first phase of enforcement includes bans on AI systems considered to pose an “unacceptable risk,” such as social scoring, real-time facial recognition, and AI tools that manipulate human behavior. Companies found violating these rules could face fines of up to €35 million ($35.8 million) or 7% of global annual revenue, whichever is higher—exceeding penalties under Europe’s strict General Data Protection Regulation (GDPR).
The Road Ahead for AI Compliance
While the AI Act is now in effect, full implementation will unfold in stages. Experts say compliance will depend on additional standards, guidelines, and secondary legislation to define enforcement details. Tasos Stampelos, head of EU public policy at Mozilla, described the act as “not perfect” but “very much needed.”
The newly established EU AI Office is playing a key role in enforcement. In December, it released a second draft of a code of practice for general-purpose AI (GPAI) models, such as OpenAI’s GPT. The latest draft includes exemptions for some open-source AI models but requires developers of high-risk systems to undergo strict risk assessments.
Balancing Regulation and Innovation
The AI Act has sparked debate among industry leaders. Some fear that excessive regulation could stifle innovation, while others argue that Europe’s clear AI rules could set a global standard for ethical AI development.
Prince Constantijn of the Netherlands has voiced concerns about Europe’s heavy regulatory focus, warning that it might hinder competitiveness in a fast-moving industry. However, others see an opportunity. Diyan Bogdanov, director of engineering intelligence at Payhawk, believes the EU’s emphasis on bias detection, risk assessments, and human oversight will make European AI models the most trustworthy in the world.
As enforcement begins, the global tech community will be watching closely to see if the EU’s AI Act shapes the future of AI governance—or proves too restrictive for innovation to thrive.
