What are the implications of the EU AI Act for UK businesses?

In March, the EU passed the world’s first wide-ranging legislation on AI: The EU AI Act (EUAIA). The regulation seeks to address the risks – and harness the potential – of AI and will certainly have a huge impact on UK businesses and is highly likely to be used as a blueprint for governments around the world, not least in the UK.   

The EUAIA takes effect this Spring with a two-year implementation period. It takes a risk-classification approach to AI, and seeks to ensure the development of ethical and trustworthy AI systems, something which all AI legislators are after.

Taking a risk-based approach means classifying the applications of AI according to their level of harm. High-risk applications, such as those in education, employment, and law enforcement, face stringent requirements like pre-market assessments and post-market monitoring. Limited-risk systems like deepfakes and chatbots must comply with transparency obligations. Recent additions to the Act have addressed general-purpose AI models, such as GPT-4 and other large language models, mandating measures like copyright policies and data transparency.

With the EUAIA set to come into effect in the coming weeks, here are 5 key things for UK businesses to consider:

🔎Check if the EUAIA rules apply to you🔎: UK companies need to look at whether the EUAIA Act covers their operations. This isn't just about having a physical presence or selling directly in the EU. If your AI systems’ outputs are used by or affect EU citizens in any way, the rules apply - even if your business is purely UK-based.

‼️Rigorously assess AI risk areas‼️: For "high-risk" AI uses like education, hiring or law enforcement, UK firms will have to conduct in-depth risk evaluations. These assessments go beyond existing data rules like GDPR, requiring transparency on how the AI works, potential biases, and limitations.

⚙️Brace for platform updates⚙️: If your company uses international services or platforms like LinkedIn or Workday, expect them to update their products to comply with the EU rules. This means you'll need to adapt your processes to the platform changes.

🏆See compliance as a competitive edge🏆: Though challenging, getting ahead of the EU AI Act could help UK companies gain an advantage in the EU market. Businesses that nail the ethical AI requirements could attract customers and partners who value responsible AI practices.

🌐Weigh EU expansion opportunities 🌐: The Act is important for UK AI firms with operations in, or plans to expand to, the EU single market. While compliance will be tough, not following the rules could mean being locked out of one the world’s largest economic blocs.

With the EU leading the way on AI regulation worldwide, and potentially influencing UK legislation, getting ahead could pay dividends for British businesses, both in the EU market and at home.

Want to understand more about what the EU AI Act means for you? Get in touch directly.

George Farrer , Consultant, Fourtold