European companies sound alarm over draft AI law

Dozens of Europe’s largest companies, including Germany’s Siemens and France’s Airbus, have spoken out against proposed EU artificial intelligence regulation, saying the rules risk harming competitiveness yet fail to deal with potential challenges.

The companies, in an open letter signed by more than 150 executives, told Europe’s institutions that AI offered the “chance to rejoin the technological avant-garde” but regulation that was too tough could stifle that opportunity.

“In our assessment, the draft legislation would jeopardise Europe’s competitiveness and technological sovereignty without effectively tackling the challenges we are and will be facing,” said the letter, sent on Friday to the European Commission, the parliament and member states.

EU politicians, after nearly two years of wrangling, recently agreed on the toughest set of rules on AI in the world. The draft text of the Artificial Intelligence Act will serve as the negotiating position between member states and the European Commission.

Fears meanwhile are growing over the potential risks of the fast-developing technology, with demands for regulation increasing since November when OpenAI launched its chatbot ChatGPT, one of the first widely available consumer AI applications.

The signatories, ranging from carmaker Renault to the world’s second-largest brewer Heineken, said their concerns were particularly acute over generative AI. The proposed rules would “heavily” regulate foundation models, which is the technology underpinning chatbots, “regardless of their use cases”, they added.

Companies developing and implementing such systems would face disproportionate compliance costs and liability risks, the letter said. Such limitations could lead to companies leaving the bloc, investors withdrawing from AI development in Europe and the creation of a “critical productivity gap” compared with the US.

“Europe cannot afford to stay on the sidelines,” the letter said. Instead of focusing the law on generative AI and implementing “rigid compliance”, regulators in Brussels should produce a law that confines itself to “broad principles in a risk-based approach”.

The rules risk undermining the bloc’s technological ambitions rather than nurturing innovation, the letter said.

The companies called for the EU to set up a regulatory body of industry experts to monitor the implementation of the law as the technology advanced.

The signatories appear to have failed to read the text and are reacting “on the stimulus of a few”, Dragoș Tudorache, an MEP who led the development of the draft law, said in response to the letter.

“It is a pity that the aggressive lobby of a few are capturing other serious companies,” he said. That “unfortunately undermines the undeniable lead that Europe has taken” globally on regulation.

Tudorache said that the only “concrete” suggestions that the companies put forward in the letter were what the European parliament has before it: “an industry-led process for defining standards, governance with industry at the table, and a light regulatory regime that asks for transparency. Nothing else.”