The EU’s landmark AI Act has officially entered into force today (Thursday 1 August), signalling a tough crackdown on the world’s biggest technology companies and a potential knock-on impact on UK enterprises.
The EU AI Act regulates the uses of AI with the aim of balancing its benefits and risks, while also fostering innovation.
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Within the act, the priority of AI regulation is focusing on safety, transparency, traceability and ensuring AI models are non-discriminatory and environmentally friendly.
The EU AI Act takes a risk-based approach and classifies each application into three categories; unacceptable risk; high risk; and limited, minimal, or no risk.
The regulations restricting the AI system vary depending on which risk level it is classified as having.
Most of the US-based Big Tech companies will be targeted as a priority by the legislation, but experts believe enterprises in the UK could still be significantly impacted.
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By GlobalDataHow will UK businesses be impacted by the EU AI Act?
Despite the AI Act not directly impacting UK businesses’ domestic operations, the legislation will still play a role in governing their operations in the EU.
If a UK-based company is in the process of developing an AI system with the intent of entering the EU market, the company will need to be aware of where it falls in the Act’s risk tier system.
If a UK business has developed an AI system that falls into the “unacceptable risk” category, it will be banned.
Steve Lester, CTO of business services consultancy Paragon, said the EU AI Act will reshape how businesses operate, especially for UK companies engaging with the EU market.
“Compliance with the Act’s requirements is not optional for businesses; it applies to any AI systems that affect EU citizens or markets,” Lester said.
Businesses in the UK will have to clearly disclose when AI is being used and ensure that they are adhereing to the Act’s guidelines in terms of targeting and personalisation, according to Lester.
“The prohibitions on practices like biometric categorisation require a re-evaluation of existing AI strategies to align with ethical standards,” he added.
How should UK businesses prepare for the AI Act?
Jacob Beswick, director of AI governance solutions at AI company Dataiku, said there are a number of steps UK businesses should take over the next 18 months to ensure they are fully prepared.
“As one of the most comprehensive pieces of AI regulation to be passed to date, preparing for compliance is both a step into the unknown as well as an interesting bellwether as to what might be to come in terms of AI-specific regulatory obligations across the globe,” Beswick said.
UK businesses should be understanding where they are deploying their AI systems and their intended purpose, as well as establishing where they fall in terms of the AI Act risk tiering, according to Beswick.
“Determining exposure to future compliance obligations will enable businesses to begin taking action to mitigate the risk of non-compliance and avoid disruptions to business operations, whether through fines or pulling operational systems from the market,” he said.
Lester also believes UK companies should embark on a thorough audit of their AI systems, as well as taking the time to invest in staff training on AI ethics.
“While these steps can be challenging, compliance will improve customer trust and provide a competitive edge in the EU market,” Lester said.
“It is all about maintaining trust with EU customers, showing them that responsible AI development can go hand in hand with risk management, compliance and ethical AI practices,” he added.
