EU Rebuffs Its Leading Companies; Pushes Ahead with Stringent AI Act

By Paul Steidler: In March 2024, the European Union adopted the world’s most comprehensive legislation on artificial intelligence, setting sweeping rules for developers and many restrictions on how the technology is used. Violators can be fined up to seven percent of their worldwide revenue.

While the measure will be onerous for U.S. AI developers, a group of 46 European CEOs, to no avail, pushed hard on July 3 to secure a two-year delay in the legislation, whose major provisions go into effect starting August 2. Signers included the leaders of BNP Paribas, Lufthansa, Mercedes-Benz, Airbus, and Siemens Energy.

Of note, the European business leaders said, “To address the uncertainty this situation is creating, we urge the Commission to propose a two-hear “clock-stop” on the AI Act before key obligations enter into force in order to allow both for reasonable implementation by companies, and for further simplification of the new rules. This should apply both to obligations on high-risk AI systems, due to take effect as of August 2026, and to obligations for general-purpose AI models due to enter into force as of August 2025.”

At a press conference on July 4, European Commission spokesperson Thomas Regnier sternly rejected the request, saying, “There is no stop the clock. There is no grace period. There is no pause.” Mr. Regnier’s comments are especially audacious given that the European Commission has failed to meet a May 2, 2025 deadline for issuing a Code of Practice, which is intended to guide the development of general-purpose AI systems. That code is expected in the coming days, making compliance even more challenging.

A recent study by Strand Partners found that European businesses across the board are struggling with the EU’s AI Act. Of note, 68 percent of European businesses surveyed said that they struggle to understand their responsibilities under the EU AI Act. Forty percent of EU IT spending already goes to compliance-related costs.

It is clear that the EU AI Act will harm many more companies than large U.S. AI developers. It is also clear that the measure goes against the core recommendations of Mario Draghi’s September 2024 report urging deregulation and J.D. Vance’s February 11 seminal AI speech in Paris. As Europe continues to degrade as a tech power, its economy and its people will suffer more.