The EU’s AI Act, the world’s first comprehensive AI law, is now being implemented across its 27 member states.

The legislation applies to both local and foreign companies that provide or deploy AI systems in the EU.

It introduces a tiered risk framework, banning certain “unacceptable risk” applications, imposing strict rules on “high-risk” uses, and setting lighter requirements for “limited risk” scenarios.

The first restrictions took effect on February 2, 2025, prohibiting uses such as untargeted scraping for facial recognition databases.

From August 2, 2025, major general-purpose AI models such as those from OpenAI, Google, Meta, and Anthropic must comply with new rules.

Existing AI models have until August 2, 2027, to comply with the new rules.

Penalties for violations can reach up to €35 million (US$40.5 million) or 7% of global turnover, whichever is higher.

Some tech companies and European AI firms have raised concerns about the law’s impact on innovation and legal clarity.

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🔗 Source: TechCrunch

🧠 Food for thought

1️⃣ Global regulatory fragmentation creates uneven competitive landscapes for AI companies

The EU’s comprehensive approach contrasts sharply with fragmented regulatory environments elsewhere, creating different competitive dynamics across regions.

While the EU implements its risk-based framework with severe penalties up to €35 million or 7% of global turnover, the U.S. relies on a patchwork of over 25 state-level laws with California leading in comprehensive legislation 1.

Asia takes a more business-friendly approach, with countries like Singapore using regulatory sandboxes and Japan relying on non-binding ethical guidelines to prioritize innovation while ensuring governance 2.

This fragmentation means AI companies face different compliance costs and market entry barriers depending on their target regions.

The global AI market, projected to reach $3.5 trillion by 2033 3, will likely see competitive advantages shift toward regions with clearer, more predictable regulatory frameworks.

Companies operating globally must now design products to meet the strictest standards, effectively making EU compliance the global standard, similar to how GDPR influenced worldwide data protection practices.

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