European companies slam the EU’s incoming AI regulations

Some of the biggest companies in Europe have taken collective action to criticize the European Union’s recently approved artificial intelligence regulations, claiming that the Artificial Intelligence Act is ineffective and could negatively impact competition. In an open letter sent to the European Parliament, Commission, and member states on Friday, and first seen by the Financial Times, over 150 executives from companies like Renault, Heineken, Airbus, and Siemens slammed the AI Act for its potential to “jeopardise Europe’s competitiveness and technological sovereignty.”

On June 14th, the European Parliament greenlit a draft of the AI Act following two years of developing its rules, and expanding them to encompass recent AI breakthroughs like large language AI models (LLMs) and foundation models, such as OpenAI’s GPT-4. There are still several phases remaining before the new law can take effect, with the remaining inter-institutional negotiations expected to end later this year.

The signatories of the open letter claim that the AI Act in its current state may suppress the opportunity AI technology provides for Europe to “rejoin the technological avant-garde.” They argue that the approved rules are too extreme, and risk undermining the bloc’s technological ambitions instead of providing a suitable environment for AI innovation.

One of the major concerns flagged by the companies involve the legislation’s strict rules specifically targeting generative AI systems, a subset of AI models that typically fall under the “foundation model” designation. Under the AI Act, providers of foundation AI models — regardless of their intended application — will have to register their product with the EU, undergo risk assessments, and meet transparency requirements, such as having to publicly disclose any copyrighted data used to train their models. 

The open letter claims that the companies developing these foundation AI systems would be subject to disproportionate compliance costs and liability risks, which may encourage AI providers to withdraw from the European market entirely. “Europe cannot afford to stay on the sidelines,” the letter said, encouraging EU lawmakers to drop its rigid compliance obligations for generative AI models and instead focus on those that can accommodate “broad principles in a risk-based approach.” 

“We have come to the conclusion that the EU AI Act, in its current form, has catastrophic implications for European competitiveness,” said Jeannette zu Fürstenberg, founding partner of La Famiglia VC, and one of the signatories on the letter. “There is a strong spirit of innovation that is being unlocked in Europe right now, with key European talent leaving US companies to develop technology in Europe. Regulation that unfairly burdens young, innovative companies puts this spirit of innovation in jeopardy.”

The companies also called for the EU to form a regulatory body of experts within the AI industry to monitor how the AI Act can be applied as the technology continues to develop.

“It is a pity that the aggressive lobby of a few are capturing other serious companies,” said Dragoș Tudorache, a Member of the European Parliament who led the development of the AI Act, in response to the letter. Tudorache claims that the companies who have signed the letter are reacting “on the stimulus of a few,” and that the draft EU legislation provides “an industry-led process for defining standards, governance with industry at the table, and a light regulatory regime that asks for transparency. Nothing else.”

OpenAI, the company behind ChatGPT and Dall-E, lobbied the EU to change an earlier draft of the AI Act in 2022, requesting that lawmakers scrap a proposed amendment that would have subjected all providers of general-purpose AI systems — a vague, expansive category of AI that LLMs and foundation models can fall under — to the AI Act’s toughest restrictions. The amendment was ultimately never incorporated into the approved legislation.

OpenAI’s CEO Sam Altman, who himself signed an open letter warning of the potential dangers that future AI systems could pose, previously warned that the company could pull out of the European market if it was unable to comply with EU regulations. Altman later backtracked and said that OpenAI has “no plans to leave.”