The European Union has made history by approving the final version of its highly anticipated Artificial Intelligence (AI) Act, a landmark move that sets a new standard for the global AI industry. This comprehensive legislation aims to restrict the public use of high-risk AI applications, such as deepfakes and facial recognition software, and will apply to all companies operating in the 27 EU-member states, which represent approximately 20% of the global economy. AI companies that breach the new act will face substantial fines of up to 35 million euros ($38 million) or 7% of their annual global revenue.

Mathieu Michel, Belgium's secretary of state for digitization and privacy protection, hailed the adoption of the AI Act as a significant milestone for the European Union, emphasizing the importance of trust, transparency, and accountability in the development and deployment of AI technologies. The EU's three branches of power – the Commission, Parliament, and Council – all agreed on the final version of the Act, which outlines different risk categories of AI use, ranging from "low-risk" to "high" and "unacceptable risk."

The AI Act prioritizes consumer protection by banning AI apps that threaten individual rights, such as facial recognition software in public places and social scoring. Sensitive "high-risk" use cases, like border management, education, and recruitment, will be allowed but require companies to disclose more information about the data used to train their systems. The EU Parliament will enforce fines on firms that break the AI law, which could amount to $38 million or 7% of their annual global turnover.

While the AI Act aims to ensure "safe AI," startup founders have expressed concerns that the law could hinder investment and innovation, particularly for smaller companies. Entrepreneurs fear that the measures could stifle growth and put Europe at a disadvantage in the global AI race. To address these concerns, the EU bloc has announced measures to boost innovation for European startups developing "trustworthy" AI, including privileged access to supercomputers and the establishment of "AI Factories" to provide the required infrastructure.

The AI Act's impact will be significant, and its effects will be closely watched by the global AI community. As the first major economic power to introduce comprehensive AI rules, the European Union sets a precedent for other regions to follow. The Act's emphasis on trust, transparency, and accountability in AI development and deployment is a crucial step towards ensuring that AI benefits society as a whole. With the AI Act, Europe pioneers a new era of "safe AI," and its influence will be felt far beyond the EU borders.