Introduction
The world’s first artificial intelligence (AI) rules, set to take effect across the European Union (EU) on August 1, are expected to increase the costs of assessment and compliance for Chinese tech companies operating in the EU’s 27 member states.
What is the AI Act?
The Artificial Intelligence Act, approved by the EU Council in May, aims to protect fundamental rights, democracy, the rule of law, and environmental sustainability from high-risk AI while fostering innovation and establishing Europe as a leader in technology.
Impact on Chinese Tech Firms
Some Chinese AI firms anticipate higher costs and more time spent complying with the new rules. For instance, Hong Kong-based Dayta AI expects a 20-40% increase in R&D and testing costs due to the new compliance requirements.
Why Are These Regulations Important?
The EU’s AI rules aim to create an environment of trust by establishing obligations based on the technology’s potential risks and impact. The regulation includes 12 main titles covering prohibited practices, high-risk systems, transparency obligations, and more.
Real-World Testing
The regulation will require member states to set up regulatory sandboxes for real-world testing. However, these rules do not apply to AI systems developed solely for scientific research and development.
Penalties for Non-Compliance
Non-compliance can result in fines of up to 35 million euros or 7% of the offending firm’s total worldwide annual turnover, whichever is higher.
Comparing EU and Chinese Regulations
Dayta AI’s CEO Patrick Tu noted that the EU’s focus on data quality will enhance the performance and fairness of AI solutions. In contrast, Chinese regulations emphasize adherence to socialist values and political stability.
Conclusion
As governments worldwide race to regulate AI, the EU’s AI Act is poised to serve as a blueprint for other regions. Businesses should consider lobbying for more consistent cross-market rules.
This article originally appeared in the South China Morning Post (SCMP).
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