Europe’s Proposed Artificial Intelligence Law Could Cost Its Economy $36 Billion 

A new law proposed for the European Union designed to regulate artificial intelligence could cost the nation up to 32 billion euros; about $36 billion. The payments would be spread out over five years according to a report from the Center for Data Innovation, a Washington-based think tank. 

The Artificial Intelligence Act is a proposed law put forward by the European Commission, the executive arm of the EU. The act is said to be the :world’s most restrictive regulation of AI” according to the center. 

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“It will not only limit AI development and use in Europe but impose significant costs on EU businesses and consumers.”

The Center for Data Innovation argued that a small or midsize enterprise with a turnover of 10 million euros will face compliance costs of up to 400,000 euros if it was to deploy an AI system deemed “high risk.” These systems are ones that the commission defines as “affecting people’s fundamental rights or safety.” 

“That designation sweeps in a broad swath of potential applications — from critical infrastructure to educational and vocational training — subjecting them to a battery of requirements before companies can bring them to market,” the center said.

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The center argues that “compliance borders” will cost European businesses 10.9 billion euros per year by 2025, or 31 billion euros over the next five years. Ben Mueller, a senior policy analyst at the Center for Data Innovation and author of the report suggested that this would be more harmful than helpful to many sectors of the economy. 

“The Commission has repeatedly asserted that the draft AI legislation will support growth and innovation in Europe’s digital economy, but a realistic economic analysis suggests that argument is disingenuous at best.”

“The rosy outlook is largely based on opinions and shibboleths rather than logic and market data,” he added, explaining that AI is already being used by major companies like Google, Apple, and Facebook, but lawmakers in Europe aren’t even aware of the impact this new law could have. 

Mueller explained that the technology has the potential to improve healthcare and climate modeling for the nation, however, it can also be used to give every citizen a “social score.” The law is still in the works and the debates over its actual benefits are ongoing.