New legislation in Europe aimed at regulating the use of artificial intelligence (AI) could cost the region’s economy $36 billion (or 31 billion euros) over the next five years, a report from the Center for Data Innovation concludes.
The law in question is the European Commission’s Artificial Intelligence Act, and according to the Washington, D.C.-based think tank’s report, it would be the “most restrictive regulation of AI” in the world.
“The AIA is likely to spark a chilling effect on investments into AI in Europe, due to the Act’s legal complexity and the compliance costs it engenders,” the report says. “This will damage Europe’s digital transformation before it is even properly underway.”
As PYMNTS reported earlier this year, the EU’s regulation largely covers “high-risk” AI usage, as well as rules covering which applications if AI should be entirely banned, such as cases where a person is blatantly being manipulated.
The Center for Data Innovation report cites figures from the EU’s own Digital Decade target, which predicts three quarters of businesses in Europe will be using AI by 2030.
“It is hard to see how this is achievable given the costs of the AIA for European businesses that want to invest in AI in a ‘high risk’ sector,” the report argues.
The center also worries the law will trigger a “brain drain” of innovators in Europe planning to develop new AI technologies in high-risk sectors.
AI adoption will become more expensive for businesses, skilled workers will become less available and companies will lack the resources to comply with the AIA. That in turn will “further dampen the vitality of Europe’s digital ecosystem,” the report says.
Businesses on both sides of the Atlantic can use AI to their advantage. For example, AI can help small businesses in the face of rising inflation, according to Matthew Pavich, managing director of global strategic consulting at Atlanta-based price optimization platform Aptos.
In a recent interview with PYMNTS, Pavich said inflation could be a chance for retailers to use AI and price optimization software to keep prices steady — and in turn, keep customers happy.