All you need is AI? Findings of the Bird & Bird AI event

Representatives of the EU institutions, industry leaders and regulatory experts offered practical compliance advice to companies preparing for the new EU Artificial Intelligence Act during a recent in-person seminar (19 March 2024) in Brussels. The event was organised by Bird & Bird’s Regulatory & Public Affairs team and co-chaired by Francine Cunningham, Regulatory and Public Affairs Director (Brussels/Dublin), and Feyo Sickinghe, Principal Regulatory Counsel (The Hague). Shima Abbady, a senior associate from Bird & Bird’s Hague office presented a comprehensive overview of the final AI Act.

Yordanka Ivanova, a Legal and Policy Officer in the European Commission (Directorate General for Communications Networks, Content and Technology), described the Act as a balanced compromise and a prototype for future global AI regulation. According to Ms Ivanova, a key component of the AI Act's implementation is its governance framework, which has been devised by the EU institutions in a way to optimise coordination and collaboration among a broad spectrum of stakeholders. She described how the Commission’s new AI Office will play a central role in the supervision of the General Purpose AI (GPAI) provisions. The AI Office faces immediate complex tasks, including drafting secondary legislation, as well as advising on regulatory sandboxes and codes of practice.

Furthermore, Ms Ivanova highlighted the importance of the AI Pact, which aims to provide a voluntary compliance framework in the interim period until the AI Act applies. A workshop for more than 300 companies that have signed up for the Pact will be organised in the near future. Ms Ivanova also stated that no fines for non-compliance would be imposed during the first year after the AI Act's entry into force, adding this grace period could provide companies with additional time to fully understand the new law.

Panel 1: “Are we all becoming Chief AI Officers? Responsibilities along the AI value chain”

The first panel, led by Francine Cunningham, focused on the allocation of responsibilities along the AI value chain. Laura Caroli, Senior Policy Advisor to Member of the European Parliament and co-rapporteur on the file, Brando Benifei (Italy, S&D), reported that the negotiation process resulted in over 4,400 amendments to the Commission’s proposed legislation. The subsequent inter-institutional “trilogue” negotiations, involving the European Parliament, Council, and Commission, was intense with the Parliament and Council often holding divergent views. While industry lobbied heavily, Caroli emphasised the gravity of the responsibility on the European legislative bodies. The final AI Act text, she acknowledged, resulted in varying degrees of satisfaction among stakeholders, with no party being 100 % content. Ms Caroli added that this outcome is reflective of the complexity involved in navigating the high-stakes field of AI regulation. During the next mandate, she expects the European Parliament to focus on secondary legislation and AI in the workplace, in addition to AI liability and copyright.

Daniel Friedlaender, Senior Vice President & Head of Office at the Computer and Communications Industry Association (CCIA Europe), raised concerns about the rushed end of the negotiations on the AI Act.  Mr Friedlaender highlighted that numerous questions remain unresolved and pointed to last-minute additions, which he characterised as unclear. Despite these uncertainties, he underlined that the industry is committed to making the AI Act work and urged alignment with existing industry practices wherever possible.

Tjade Stroband, Director European Government Affairs at Microsoft, stated that compliance is a significant challenge, particularly given the amount of Commission guidance and secondary legislation that is still to come, as well as the extensive interaction between the AI Act and the other recent technology regulations, including the Digital Services Act, the Data Act, the Product Liability Directive and the proposed AI Liability Directive. Mr Stroband also highlighted the impact of the AI Act on European innovation, in the context of small and medium-sized enterprises (SMEs) which might need to allocate resources to legal services rather than engineering due to complex compliance requirements. Against this background, Mr Stroband furthermore underlined the particular importance of international and harmonized standards, as well as the need for alignment between international governance frameworks.

Panel 2: “Governance, sandboxes and competition: what’s ahead”

During the second panel, titled “Governance, sandboxes and competition: what’s ahead”, hosted by Feyo Sickinghe, Regina Ojea-Schneider from Amadeus IT Group and Cas Mevissen of the Dutch Ministry of Economic Affairs, both voiced concerns about the overlap between existing regulations in the digital environment. They underscored the importance of data quality in ensuring compliance. Ms Ojea-Schneider expressed optimism about the AI Act's long-term benefits and stated that compliance with the AI Act could also act as a competitive advantage for enterprises. Mr Mevissen was positive about the future potential of regulatory sandboxes, which would serve as a safe space for dialogue between companies and regulators about innovation and legislation.

Meanwhile, Baptist Vleeshouwers provided a competition perspective on AI regulation. He noted that the AI sector's needs—vast data quantities, computing power, and specialised knowledge—can in some circumstances create a conducive environment for anti-competitive behaviour. Mr Vleeshouwers also noted that while compliance could confer a competitive advantage on larger companies that are in a better position to implement the necessary measures, SMEs that are unable to devote substantial resources to compliance could be potentially disadvantaged.

Much will depend on the implementation of the new Regulation

There was general acknowledgement that the implementation of the AI Act presents a substantial challenge for stakeholders. Significant questions and concerns remain, particularly around the clarity of certain provisions in the text. Ongoing, effective dialogue will be needed between industry, the EU institutions and national competent authorities to ensure that the incoming Regulation achieves the right balance between on the one hand protecting European consumers and businesses, and on the other hand facilitating innovation and promoting competition in the EU internal market.