EU digital economy policy, including AI

October 2, 2024

Smart city and communication network concept. 5G. LPWA (Low Power Wide Area). Wireless communication. — image: ©metamorworks | iStock

Open Access Government provides an extended update of the European Commission digital economy policy, with a focus on artificial intelligence and digital transformation

Did you realise that the Directorate‐General for Communications Networks, Content and Technology (Connect) is responsible for creating and implementing the Commission’s strategies on the digital economy and society, as well as research and innovation? This piece will focus on the former.

Connect creates and implements strategies to ensure Europe is prepared for the digital age. In fact, their goal is to transform Europe into a worldwide frontrunner in the data economy and cybersecurity. Connect promotes the internal market, enabling all businesses to invest and compete fairly, innovate, market, and utilise digital technologies, products, and services while also honouring the rights of creators and consumers.

The esteemed leadership and organisation of Connect includes Roberto Viola, Director‐General. Connect is also involved in setting up super‐fast internet networks for businesses and homes, recognising that being connected is crucial for digital transformation.

Connect advocates for the European Union’s (EU) approach centred on people, emphasising a digital change that is innovative, equitable, and sustainable while honouring the democratic principles of democratic values, cultural diversity and fundamental rights. Connect aims to close the gap in digital access by assisting in enhancing the digital knowledge and abilities of EU residents. (1)

August 2024: The EU’s AI regulation takes effect

The European Artificial Intelligence Act (AI Act) became effective on August 1, 2024, marking the debut of the world’s first all-comprehensive artificial intelligence regulation.

The AI Act is designed primarily to guarantee that AI created and applied within the EU is reliable, incorporating protections to safeguard individuals’ basic rights. The regulation intends to create a unified internal market for AI within the EU, promote its adoption, and foster a conducive atmosphere for investment and innovation.

The AI Act introduces a progressive definition of AI that focuses on product safety and a risk approach, some of which are detailed below:

Minimal risk: A large number of AI systems, like those that recommend products or filter spam, are considered to be in this category. Because they pose little risk to people’s rights and safety, these systems are exempt from the requirements of the AI Act.
High risk: AI systems classified as high-risk must adhere to stringent standards, encompassing risk‐ reduction measures, high quality data sets, activity logging, comprehensive records, clear user details, human supervision, and a significant degree of strength, precision, and cybersecurity.
Unacceptable risk: AI technologies that pose a significant danger to individuals’ fundamental liberties will be prohibited. This encompasses any AI technologies or tools that alter human behaviour to override individuals’ free choice, like “toys using voice assistance encouraging dangerous behaviour of minors”, systems permitting ‘social scoring’ by either the government or corporations, and particular implementations of ‘predictive policing’.

In addition to this framework, the AI Act also sets regulations for what are referred to as general‐purpose AI models. These advanced AI models are created to carry out a broad range of functions, such as producing text that resembles human writing. General‐purpose AI models are becoming more common as parts of AI systems. The AI Act aims to provide clarity throughout the process and tackle potential “systemic risks of the most capable models”.

Countries have until August 2, 2025, to appoint local experts responsible for managing the implementation of AI regulations and conducting market oversight. The Commission’s AI Office will serve as the key agency for the AI Act across the EU and will enforce the regulations for broad‐use AI systems.

and promises enormous benefits for citizens, our society and the European economy. The European approach to technology puts people first and ensures that everyone’s rights are preserved. With the AI Act, the EU has taken an important step to ensure that AI technology uptake respects EU rules in Europe, “ said Margrethe Vestager, Executive Vice‐President for a Europe Fit for the Digital Age (2019-2024).

Three advisory groups will assist in implementing the regulations. The European Artificial Intelligence Board will guarantee consistent enforcement of the AI Act throughout the EU Member States and serve as the primary entity for collaboration between the Commission and the Member States.

Additionally, a group of independent scientists will provide expert technical advice and feedback on how to enforce the rules. Specifically, this group has the authority to notify the AI Office about potential dangers linked to general-purpose AI models. The AI Office can also seek advice from an advisory committee made up of a varied group of stakeholders.

Businesses failing to adhere to regulations will face penalties. Penalties may range from up to 7% of the worldwide yearly revenue for breaches of prohibited AI software, up to 3% for other obligations, and up to 1.5% for providing inaccurate information.

Regarding the subsequent actions, it’s understood that the majority of AI Act regulations will take effect starting on August 2, 2026. “However, prohibitions of AI systems deemed to present an unacceptable risk will already apply after six months, while the rules for so‐called General-Purpose AI models will apply after 12 months,” we are told.

To smooth the transition period until complete enforcement, the Commission has initiated the AI Pact. This effort encourages AI developers to proactively embrace the essential responsibilities of the AI Act before the legal mandates take effect.

Thierry Breton, Commissioner for Internal Market (2019-2024) declared that August 1, 2024, represents a crucial turning point in Europe’s dominance in reliable AI. “With the entry into force of the AI Act, European democracy has delivered an effective, proportionate and world-first framework for AI, tackling risks and serving as a launchpad for European AI startups,” Commissioner Breton added. (2)

Propelling the EU’s digital transformation

On July 2, 2024, the Commission released its second report detailing the current status of the Digital Decade Policy Programme (DDPP).

In 2024, the report features an analysis of the national Digital Decade strategic roadmaps submitted by Member States, outlining the intended measures, initiatives, and financial support aimed at aiding the EU’s digital transformation.

The Commission’s study reveals that, at present, the combined actions of Member States will not meet the EU’s ambitious goals. The recognised deficiencies encompass the necessity for more funding, both from the EU and individual countries, especially in digital skills, superior internet access, business adoption of AI and data analytics, start‐up environments and semiconductor production.

The EU and its countries play a crucial role in applying new laws, promoting digital tech, and ensuring people have the digital skills needed to fully enjoy the digital transformation. This year’s report urges countries to take more action, as reaching the Digital Decade goals in infrastructure, skills, businesses, and public services is crucial for “the EU’s future economic prosperity and societal cohesion”.

The document underscored the importance of embracing and advancing cutting‐edge technologies for Europe’s competitive edge, especially in the present geopolitical environment and because of rising cybersecurity risks, which necessitate improved resilience and “enhanced security protocols”.

Additionally, focusing on individuals as the heart of the digital revolution within our communities and financial systems is fundamental to the Digital Decade and the initial guideline of the Declaration on Digital Rights and Principles.

Member States must update their roadmaps to match the goals of the DDPP by December 2, 2024. The Commission will check how well these updates are done and report on the progress in 2025.Member States must update their roadmaps to match the goals of the DDPP by December 2, 2024. The Commission will check how well these updates are done and report on the progress in 2025.

Vice‐President Vestager mentioned that the report unequivocally demonstrates that the EU is falling short of achieving its digital transformation goals in Europe, yet it also outlines a definitive path forward. “We need additional investments in digital skills, high‐quality connectivity, and uptake of Artificial Intelligence. We need to incentivise the use of digital tools. We need many more people to get digital skills – both basic and expert level – to leverage our strengths. And we need to foster cooperation and better integrate our single market to really enable the digital transformation across Europe,” Vestager argued. (3)

AI advancement, reducing its risks

Did you realise that by the end of May 2024, the Commission introduced the AI Office, which was set up as an entity within the Commission? This is an excellent place to close this extended policy analysis piece, much of which covers recent AI developments.

The AI Office is committed to promoting the advancement, deployment, and application of AI in a manner that enhances societal and economic advantages and encourages innovation, all while reducing potential risks. The Office is central to the execution of the AI Act, particularly concerning “general‐purpose AI models”. Additionally, it aims to support research and development in trustworthy AI and establish the EU as a frontrunner in global conversations.

It’s fitting, therefore, that the last word goes to Commissioner Breton: “With the new AI Office and its 140 talented women and men, the Commission will have the necessary expertise to drive the implementation of the AI Act and to reinforce Europe’s role as a global standard-setter in AI. The Office will foster a European AI ecosystem that is innovative, competitive and respectful of EU rules and values.” (4)