Study warns of compliance costs for regulating Artificial Intelligence

The EU's forthcoming regulation on Artificial Intelligence could cost the bloc's economy up to €31 billion over the next 5 years and cause investments to shrink by as much as 20%, according to a study published on Monday (26 July). The assessment by the Centre for Data Innovation looked into the administrative costs of the Artificial Intelligence Act (AIA), a horizontal EU regulation to introduce increasing obligations based on the level of risk associated with the application of the groundbreaking technology. The study author stresses the administrative burden the new legislation is expected to create, which they say will disincentivise innovation and technology uptake. "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," said senior policy analyst and report author Ben Mueller. That goal would require roughly 10 times the level of current investment in the technology, yet the study author says compliance costs would eat up just under 20% of those investments.