Europe is keeping a tight leash on the proliferation of AI with a landmark act, affecting Big Tech players in Silicon Valley amid the global AI race.
The EU AI Act, which was reportedly proposed in April 2021, was formally adopted by the European Parliament in March 2024 and by the European Council in May 2024. It was published in the Official Journal of the European Union on July 12, 2024, and entered into force on Aug. 1, 2024, with full applicability set for Aug. 2, 2026.
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The act follows a risk-based approach, categorizing AI into minimal, limited, high, and unacceptable risks. High-risk AI, like biometric recognition, faces stricter requirements, including transparency and regular risk assessments. It also emphasizes accountability, data governance, and AI transparency.
Penalties for non-compliance can reach €30 million or over $31 million, which is 6% of global turnover, similar to the General Data Protection Regulation (GDPR). It prohibits certain applications, like social scoring by governments and mass surveillance. Enforcement will be overseen by national authorities and the European Artificial Intelligence Board.
Reportedly, the landmark legislation, which became law last year, began its rollout early this month with provisions banning certain “unacceptable risk” AI applications, including social scoring systems and manipulative AI techniques. Violations of the European Union’s AI Act can result in fines of up to 7% of global revenue or €35 million (almost $37 million), whichever is greater.
“These are American companies whether you like it or not,” Trump told the crowd at the World Economic Forum in Davos last month, characterizing the E.U.’s regulatory approach as “a form of taxation.”
However, even amidst all the combative rhetoric and posturing by the Trump administration, it looks like big tech is set to comply with the new set of EU rules.
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The EU AI Act represents a major shift in how artificial intelligence is regulated, aiming to ensure safety, accountability, and ethical use of AI technologies. For companies—especially those in the tech sector—it means adapting to a stringent set of rules, with a strong emphasis on transparency, risk management, and data governance.
While it offers significant protections for individuals, businesses must carefully navigate the compliance requirements to avoid substantial penalties. Ultimately, the act sets a global precedent for AI regulation, positioning the EU as a leader in ensuring responsible AI innovation.