Companies Challenge EU AI Framework

The new European Commission's Code of Practice for General-Purpose AI (GPAI) Models is a voluntary guideline intended to help AI model providers comply with the EU AI Act’s legal obligations on transparency, safety, and copyright compliance. While the Code is deemed voluntary, AI providers who sign and adhere to the Code demonstrate compliance with the Act and are protected from immediate penalties.

• Further regulatory approvals are needed for the Code to be implemented -- tentatively expected at the end of the year. 

Key provisions: 

• Transparency: The Code specifies operational standards for transparency, requiring AI providers to give continuous updates and detailed documentation, with exemptions for open-source models that are not deemed risky. 

• Copyright: Providers must avoid building models that infringe on copyrights and must create a mechanism for addressing the complaints of rightsholders.  

• Security and Safety: Providers must implement state-of-the-art measures and conduct risk assessments, with reduced burdens for smaller providers.

Why it matters: The Commission moved forward with publishing the Code amid massive pushback from business on the EU Act itself. CEOs from companies like Airbus and BNP Paribas are calling for a two-year pause on the Act’s implementation, fearing it could jeopardize the development of AI in Europe. So far, however, the EU shows no signs of delaying.  

• Employers are worried about the lack of clarity and consistency in AI regulations, which could lead to a patchwork of rules across member states. 

• Employers also expressed concern that the current rules put European companies at a competitive disadvantage compared to U.S. and Chinese firms. 

 The bottom line: The EU AI Act applies to both EU and non-EU entities using AI systems that affect the EU market. A U.S. developer and provider of AI tools used in the EU must ensure their global AI governance and practice comply with the law.

• As global regulatory frameworks converge, aligning with the Act’s standards early may offer a competitive edge for global companies.  

• HR Policy Global advises member companies subject to the EU Act to review the Code, even if they are not GPAI providers, to understand the direction the Commission is heading regarding the interpretation of transparency and safety protocols.