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AI investing set to take a hammer blow?

The European Commission’s proposed Artificial Intelligence Act (AIA) is likely to reduce investment in this area by as much as 20%, according to a report from the Center for Data Innovation (CDI).

According to Dr Benjamin Mueller, senior policy analyst at the CDI and the author of How Much Will the Artificial Intelligent Act Cost Europe?, the proposed legislation will come at ‘a steep price’ given the strenuous demands it places on ‘high-risk’ AI. Overall, Mueller says that the AIA will cost more than €10bn per year by 2025.

What will it encompass?

‘High-risk’ AI is defined by the CDI as that which affects ‘the fundamental rights or the safety of users’. The think tank says that the AIA proposes that this AI should be:

  • trained on datasets that are complete, representative, and free of errors
  • implemented on traceable and auditable systems in a transparent manner
  • subject to human oversight at all times
  • robust, accurate, and secure

According to the CDI, operators of these systems would, under the AIA, have to:

  • Build a quality management system.
  • Maintain detailed technical documentation.
  • Conduct an assessment to ensure the system conforms to the AIA.
  • Register the system in an EU database.
  • Monitor the system once it is on the market.
  • Update the documentation and conformity assessment if substantial changes are made.
  • Collaborate with market surveillance authorities.

Not convinced

But the CDI is critical of the proposed measures.

Writing in the report, Mueller says: “Since the AIA’s list of high-risk AI uses is long, and fines for non-compliance are high, it is to be expected that the AIA’s lengthy set of requirements will come at a steep price. The point of the AIA is to ensure that ‘high-risk’ AI in Europe is covered by a detailed and broad set of legal requirements. These requirements come at a significant cost to developers and deployers of AI.”

Mueller claims that while the EC has said that the act will support growth and innovation in the sector, its argument is ‘disingenous at best’.

Mueller writes: “We estimate that the AIA would cost European businesses €10.9bn per year by 2025, having cost the economy €31bn by then. This excludes the opportunity cost of foregone investment into AI. Our analysis, based on the European Commission’s own impact assessment of the AIA, indicates that the AIA will cause a 40% profit reduction for a European business with a €10m turnover that deploys a high-risk AI system. The provisions of the AIA, however well intended, will extract a heavy price from an increasingly uncompetitive European economy.”

The AIA was originally proposed by the EC in April and sought to build upon earlier regulation. Writing for Unite AI, author Martin Anderson compared its proposed measures to attempting to remove the second spoonful of sugar from a cup of coffee.

Anderson wrote: “Article 17 of the General Data Protection Regulation Act (GDPR) requires that companies remove such user data on request. Since the act was formulated on the understanding that this erasure would be no more than a database ‘drop’ query, the legislation destined to emerge from the Draft EU Artificial Intelligence Act will effectively copy and paste the spirit of GDPR into laws that apply to trained AI systems rather than tabular data.”

Pete Carvill

Pete Carvill is a reporter, writer, and editor based in Berlin who has been writing for the B2B and mainstream media since 2007. He is a contributing writer for Expert Investor and, in addition, has...

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