On Feb. 2, the European Union (EU) launched its effort to regulate artificial intelligence (AI) by unveiling rules focusing on AI system definitions, AI literacy promotion, and prohibitions on high-risk AI practices. The EU hopes these steps will establish a common understanding of what constitutes AI, crucial for effective regulation and implementation of the EU AI Act.

It also aims to empower citizens to understand and engage with AI technologies responsibly, while prohibiting AI systems that pose unacceptable risks to individuals and society. The EU says its rules balance promoting innovation and ensuring responsible AI practices.

Groups such as the European Artificial Intelligence Board, which supports implementation across the EU, welcomed the unveiling of the EU Artificial Intelligence Act. The European Grouping of Authors’ Societies and the Federation of European Publishers also welcomed the regulations. Still, some civil society groups, including Amnesty International, argue that the EU AI Act does not go far enough in protecting human rights.

However, innovation proponents have expressed concern that the EU AI Act goes too far and may stifle innovation. Small business groups believe the regulations may require significant investments in compliance, a burden for small and medium-sized enterprises (SMEs). Vladimir Lelicanin, CTO at HAL8, shares this concern and adds that these regulations will likely affect startups.

According to Lelicanin, the EU AI Act’s extensive requirements, especially for high-risk systems, require startups and small and medium-sized enterprises (SMEs) to conduct risk assessments and maintain detailed technical documentation. This may require funding that startups and SMEs typically lack.

“For smaller players, these administrative and financial burdens can be crippling, potentially discouraging them from adopting or developing AI technologies. This is particularly troubling because Europe already trails global competitors like the U.S. and China in AI innovation,” the CTO argued.

Meanwhile, Lelicanin believes regulatory sandboxes, for which the European Commission is expected to publish guidelines before August, can help businesses navigate compliance without stifling creativity. However, Lelicanin warned that the EU needs to “ensure sandboxes remain agile and inclusive,” particularly for SMEs. This, he said, is to avoid replicating the very barriers they aim to dismantle.

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