Microsoft, the tech giant, is facing a potential fine of up to 1% of its annual revenue, which could amount to a staggering $2.1 billion or more, if it fails to respond to a request for information from the European Union (EU) by May 27. The request, made under the EU's Digital Services Act, concerns the company's Bing search engine and its associated generative artificial intelligence (AI) services.

The EU's warning comes after a request was sent on May 14 regarding specific risks stemming from Bing's generative AI features, notably "Copilot in Bing" and "Image Creator by Designer." The Commission has given Microsoft until May 27 to provide the requested information, failing which it may impose fines up to 1% of the provider's total annual income, as well as periodic penalties up to 5% of the provider's average daily income.

The potential fine is a significant amount, considering Microsoft's self-reported revenue for 202₃ was $211 billion, and it is likely to exceed that in 2024. The fine may not be a crushing blow, but it is a warning shot across the bow, indicating the EU's seriousness in addressing the risks associated with generative AI.

The EU's concern is that Bing's AI features may pose risks linked to generative AI, such as "hallucinations," deepfakes, and the automated manipulation of services that can mislead voters. The Commission is seeking information from Microsoft to understand the measures it has taken to mitigate these risks and ensure compliance with the Digital Services Act.

While Microsoft has not been found guilty of violating any EU laws, the request for information and the potential fine indicate the EU's increasing scrutiny of tech companies and their use of AI. The company has not responded to Cointelegraph's request for comment, but it is likely to take the EU's warning seriously and respond to the request for information to avoid any potential fines.

The development highlights the ongoing regulatory challenges faced by tech companies in the EU, particularly in the area of AI. As the use of AI becomes more widespread, regulators are grappling with the risks and challenges it poses, and companies like Microsoft must be prepared to address these concerns to avoid any potential legal and financial consequences.

The EU's Digital Services Act is a comprehensive piece of legislation aimed at regulating the digital landscape in the EU. It covers a wide range of issues, including online safety, data privacy, and AI governance. The Act requires tech companies to take responsibility for the content they host and the AI services they offer, and to ensure that they comply with EU laws and regulations.

Microsoft's Bing AI service is one of the many AI-powered search engines available in the market, and it has been gaining popularity in recent times. However, the EU's warning suggests that the company may not have done enough to address the risks associated with its AI features. The potential fine is a reminder that tech companies must prioritize regulatory compliance and ensure that their AI services are safe and secure for users.

Microsoft's potential fine in the EU is a significant development in the ongoing regulatory saga surrounding tech companies and AI. The EU's warning shot across the bow is a reminder that companies must take regulatory compliance seriously and prioritize user safety and security. As the use of AI becomes more widespread, we can expect to see more regulatory action in this space, and companies like Microsoft must be prepared to adapt and comply with the changing regulatory landscape.