Does artificial intelligence need rules? – The AI ​​report: Regulation for protection or a brake on innovation?

The regulation of artificial intelligence (AI) is no longer a vision of the future. With the EU AI Act, the European Union has created a groundbreaking framework that is intended to address the opportunities and challenges of AI. But how is this regulation received in the economy? And what consequences does it have for society and the ability of European companies to innovate?

The EU AI Act – A new era of AI regulation

The EU AI Act categorizes AI systems into four risk classes, thereby laying the foundation for differentiated regulation:

1. Unacceptable risk: Practices that violate ethical principles, such as social scoring or manipulative technologies, are prohibited.
2. High risk: Applications in safety-critical areas such as medicine, traffic or legal administration are subject to strict requirements.
3. Limited risk: Transparency obligations apply here, for example when using chatbots or automated decision-making processes.
4. Minimal risk: There are hardly any restrictions for low-risk applications.

With this approach, the EU AI Act not only aims to protect consumers and companies, but also sets ethical standards that could serve as a model globally. But these ambitions raise questions: Does the EU AI Act protect against misuse or does it hinder innovation?

### Corporate Responses: Opportunities and Challenges

Reactions to the EU AI Act in business are mixed. A comprehensive study by SALT AND PEPPER from summer 2024 shows how differently companies assess regulation:

• Positive perception: 61% of companies surveyed see regulation as an opportunity to improve the way they use AI and build trust.
• Concerns: However, 52.3% of respondents fear that their innovation opportunities could be limited.

What is particularly striking is that many companies are not yet sufficiently prepared:

• Only 26.2% have dealt intensively with the requirements of the AI ​​Act.
• Almost half (48.6%) say they have not yet made any in-depth preparations.

These figures make it clear that many companies underestimate the challenges that come with regulation.

The attitude towards AI regulation in society

One of the key findings of the study is that 76% of those surveyed are generally in favor of regulating AI. At the same time, 52% fear that the technology's potential could be thwarted by excessive regulations. This discrepancy reflects a key dilemma: while safety and ethics come first, economic opportunities cannot be neglected.

Benefits of regulation

The EU AI Act brings numerous benefits that affect both consumers and businesses:

• Consumer protection: Regulation protects against unethical practices and strengthens the rights of users.
• Ethics and fairness: Strict guidelines are intended to reduce discriminatory algorithms.
• Building trust: 34.9% of companies expect regulation to increase trust in AI.
• Legal certainty: Almost 39% of those surveyed see the new regulations as an opportunity for clearer legal framework conditions.

In the long term, these advantages could help increase the acceptance of AI in society and better position European companies in global competition.

Challenges and criticisms

Despite the advantages mentioned, there are significant concerns:

• Inhibition of innovation: 54% of the companies surveyed describe regulation as a potential obstacle to innovation. There is concern, especially in dynamic industries such as IT and start-ups, that competitiveness will suffer.
• Competitive disadvantages: Europe could fall behind compared to less regulated markets such as the USA or China.
• Bureaucracy: Small and medium-sized companies (SMEs) in particular could be burdened by high compliance costs.

An important demand from business is therefore that regulation does not get out of hand and leaves room for innovation. “The challenge is to find a balance between regulatory compliance and innovative strength,” emphasize experts.

How can companies benefit?

Despite the challenges, the EU AI Act also offers opportunities for companies that adapt to the new requirements early on:

1. Adapt early: Companies that adapt quickly to the new regulations can secure competitive advantages.
2. Trust as a competitive advantage: Companies can score points with customers through transparent and ethical AI applications.
3. Funding and collaboration: The EU offers support for research and development, especially for SMEs and start-ups.

Demands and future prospects

In order to make optimal use of the potential of AI and maintain Europe's ability to innovate, experts are calling for a clear strategy:

1. Investment in research and development: Europe can only survive in global competition through extensive funding.
2. Unified AI strategy: A coordinated approach at national and EU level is crucial.
3. Support for companies: Special programs for SMEs could help reduce the burden of regulation.

The coming years will show whether the EU AI Act is actually perceived as a driver of innovation or as a hindrance. The decisive factor will be whether Europe finds the balance between security and progress.

The EU AI Act marks a significant step in the regulation of artificial intelligence. While the new regulations strengthen consumer protection and ethical standards, they also pose challenges for the innovation of European companies. It is up to politicians to pave the way for AI use that is both safe and future-oriented. Companies that adapt early can not only benefit from regulation, but also become leaders in ethical AI development. The discussion about the AI ​​Act will show whether Europe can master the balancing act between regulation and innovation promotion and thus assume a role model in the global AI landscape.

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The tension between regulation and innovation

The draft of a comprehensive regulatory framework for artificial intelligence, as promoted by the EU AI Act, is currently moving into the focus of politics, business and society. There is an area of ​​tension between the need for consumer protection and ethical guidelines on the one hand and the urge for freedom of technological innovation on the other. Lively discussions have arisen in which the question is often asked whether the regulation of AI systems acts as an obstacle to technological progress or whether it even strengthens it in the long term. The following explanations examine this area of ​​tension in detail, reflect on the most important aspects and expand them to include further considerations.

“The development of AI is a double-edged sword: on the one hand, it enables us to make enormous progress in many industries, but on the other hand, we always have to keep an eye on the ethical and social impacts.” Many respondents who deal with the issue say something similar discuss the topic more intensively. This is exactly where the EU AI Act comes in and attempts to create clear guardrails for the further evolution of artificial intelligence in Europe.

The EU AI Act and its risk classes

The EU AI Act is based on a risk-based approach that divides artificial intelligence into different categories and thus defines different regulatory requirements. At the highest level, a distinction is made between prohibited, high-risk, risk-limited and minimally risky applications. This categorization should start with the fields of application and provide binding rules for each. AI systems in the “unacceptable risk” range will be completely banned, while high-risk systems will be subject to strict requirements. For example, medical or traffic-related AI solutions fall into the high-risk group because the impact on people, health and the community is significant. The draft provides for transparency obligations for “limited risks”, such as chatbots or automated customer services. However, for applications with minimal risk, the requirements remain very loose, so that there is still plenty of scope for entrepreneurship and creativity.

A central part of this regulation is to develop a common understanding of compliance with safety and quality standards. The aim is to protect both companies and consumers without disrupting groundbreaking ideas at an early stage. The hope: “If solid regulation creates trust, both manufacturers and users will benefit from the advantages of reliable AI in the long term.”

The mood in the economy

However, the practical implementation of the EU AI Act poses challenges for many companies. According to a comprehensive survey, more than half of the specialists and managers surveyed see possible obstacles to innovation. A significant proportion of 52% fear that regulation, particularly in Europe, could create a competitive disadvantage compared to less regulated regions of the world. Nevertheless, 76% of those surveyed are generally in favor of AI regulation and would like to see clear guidelines that ensure legal certainty and reliability. This shows that many decision-makers are very aware of the balance between protection and support.

“On the one hand, we don’t want irresponsible AI systems to come onto the market without control. On the other hand, we have to ensure that we do not fall behind in the international innovation race.” This dichotomy affects numerous companies and industries. The specific expectations are correspondingly divided: 61% of those surveyed agree that the AI ​​Act can be beneficial for the use and handling of AI. The same group of people emphasizes the need to design the rules in such a way that, on the one hand, they prevent abuse and, on the other hand, leave room for new ideas.

Preparedness – How well prepared are companies?

Despite the positive attitude of many managers towards the topic of regulation, very few companies are already fully prepared. Only around 26% have dealt intensively with the requirements of the AI ​​Act and their implementation. This raises questions about practical implementation. When a new legislative package comes along that may have far-reaching effects on business models or production processes, it is often not trivial to make the necessary adjustments promptly.

Many respondents expressed concerns that bureaucratic hurdles could hit small and medium-sized enterprises (SMEs) particularly hard. “It is easier for large corporations with entire legal and compliance departments to adapt to the new regulations. However, this can pose a significant challenge for SMEs, start-ups and university spin-offs.” This area of ​​tension is further exacerbated by additional aspects such as data protection, ethical requirements or the need for transparent data processing.

Opportunities through regulation

Despite all the concerns, regulating AI systems also has clear advantages. With regard to consumer safety, for example, the AI ​​Act can help eliminate manipulative social scoring or discriminatory AI systems. This not only protects individual people, but also helps to strengthen trust in technological innovations in general. In this context, 34.9% of companies emphasize that they expect a positive effect on general trust in AI systems if they are made more transparent and verifiable.

In addition, many responsible parties perceive more legal certainty as a benefit. Especially in a field as technically complex as AI, there is a great risk of entering legal gray areas. “Clear guidelines help us to develop and market our solutions on a solid basis right from the start. Unclear laws often lead to misunderstandings and ultimately slow down projects.” This argument is particularly important for companies that invest heavily in research and development and rely on long-term planning security.

Challenges for innovation and competitiveness

One of the most frequently voiced criticisms of the EU AI Act is the fear that technological development in Europe could stall compared to other regions of the world. While AI systems are sometimes developed and tested more freely in the USA or China, in Europe it could take longer until new projects can start due to stricter requirements. This concern is shared by 52% of respondents who see a limitation in the potential for future developments.

“A certain level of control makes sense, but if we chase every innovative project through a bureaucratic thicket, we are wasting Europe's locational advantage.” This assessment is often expressed by tech companies that compete internationally and fear that investments and talent are more likely to be in Regions where the regulatory environment is less complex. However, simply “less regulation” is not the goal of most actors. Rather, the struggle is to find a middle ground between clear, reliable standards and sufficient freedom for experiments.

Potential for a future-oriented AI landscape

Opportunities of artificial intelligence in healthcare

Despite all the complexities and discussions, artificial intelligence is seen as an important future technology that, under good conditions, can solve a variety of social problems. One area in which AI can develop great potential is healthcare, for example. High-risk AI systems for diagnostics or therapy suggestions must be reliable and safe. The requirements that the EU AI Act places on such applications are correspondingly high. This is precisely where careful regulation can help to protect human lives and prevent misuse.

Advances in mobility through AI systems

Another key field is mobility. Autonomous vehicles, intelligent traffic control systems and driving assistance systems are based on algorithms that make sometimes complex decisions in real time. The safety of users directly depends on the quality of these systems. “We need trust in the technology if we want to have AI-controlled vehicles on the roads across the board at some point,” emphasize many voices from automotive and supplier companies. A well-thought-out regulation, coupled with practical test phases and secure testing procedures, can be the deciding factor in Europe becoming a pioneer in the development and implementation of secure AI concepts.

Support for the economy

Need for support programs and advice for companies

To ensure that AI does not become an obstacle in Europe, experts and industry representatives are calling for more support. These include targeted funding programs that help implement new regulations and consulting services specifically for smaller companies. “Anyone who issues rules must also provide assistance so that the actors can comply with them without failing due to bureaucratic hurdles.” This could ensure that start-ups or small research institutes do not lose touch and can continue to develop innovative ideas.

Cooperation between politics, science and business

In addition, close cooperation between politics, science and business is required. Only if all players pull together will it be possible not only to develop technologies, but also to bring them onto the market safely and responsibly. For example, a uniform AI strategy at the European level could not only provide the legal framework, but also control research funding and skills development. Because it is also clear: AI is not a purely technical topic, but rather a process of change for society as a whole.

The value of ethics, privacy and transparency

Challenges caused by incorrect data sets and discrimination

Artificial intelligence has the potential to make decisions faster and often more objectively than humans. However, there is always an algorithm behind it that was programmed by people and fed with data. Errors in the data sets or unclear targets can lead to distortions. For example, when AI systems make personnel decisions or grant loans, it must be ensured that no discrimination occurs. This requires an intensive examination of ethical principles. “We must remember that AI is only as good as the data on which it is based. Objectivity is not automatic, but must be actively ensured.”

Data protection and transparency as pillars of development

Data protection also fits seamlessly into this context. European data protection standards are among the strictest in the world. The General Data Protection Regulation (GDPR) in particular has shown that it is possible to reconcile technology and privacy. The AI ​​Act is now intended to ensure that sensitive data is not used in an unauthorized manner. At the same time, transparency is emphasized. Consumers should know when they interact with an AI system and how their data is used. This approach to transparency promotes trust in the technology, but also puts pressure on companies to be more open about their processes.

Trailblazer or block in the leg?

Risks and opportunities of the EU AI Act

Ultimately, the key question is whether the EU AI Act and other AI regulations will catapult Europe into a pioneering role or whether they risk falling behind technologically. Observers assume that regulation and innovation do not necessarily contradict each other. “If we have solid guardrails in place, the long-term benefits will be greater than the initial hurdles. Companies can follow clear standards and develop their products in a legally compliant manner.” It could even turn out that a well-thought-out legal framework supports companies in offering long-term, viable and globally competitive products.

Flexible test fields and adaptability of regulation

However, the concerns cannot be ignored. In a global innovation race, speed is an essential factor. Requirements that are too strict or support structures that grow too slowly could slow Europe down in some areas. Accordingly, a possible further development of the AI ​​Act or supplementary legislation is already on the agenda. Many insiders advocate flexible “regulatory sandboxes,” i.e. test fields in which new AI technologies can be tried out under supervision without having to immediately meet all requirements in full. In this way, insights could be collected and regulation adjusted if necessary.

Balance between innovation and ethical responsibility

The EU AI Act is a significant step in setting a framework for the continued development of artificial intelligence in Europe. It reflects the need to balance innovation and ethical responsibility. On the one hand, there are high expectations for consumer protection, data protection and building trust. On the other hand, companies are confronted with bureaucratic hurdles and possible competitive disadvantages.

“Technology only brings us forward if it is accepted and supported in social and ethical dimensions.” There is a lot of truth in this sentence: mere deregulation may create incentives in the short term, but weaken society's trust in the long term. Conversely, over-regulation can mean that promising ideas do not reach the market in a timely manner. The key therefore lies in carefully weighing up all interests and being able to make adjustments if necessary.

Need for action to secure the future in Europe

The study to which the discussion refers provides a differentiated picture of the mood in the German economy: a majority supports the idea of ​​AI regulation, but at the same time fears for the innovative strength of European companies. Only a small proportion feel adequately prepared. In order to establish a competitive and at the same time reliable AI sector in Europe, further investments, comprehensive strategies and practical support are needed for all types of companies - from start-ups to corporations.

Whether the EU AI Act ultimately becomes a competitive advantage depends not least on whether it is possible to create a climate in which companies can rely on legally secure framework conditions while at the same time having enough breathing room to develop new technologies. A unified European AI strategy, closely linked to the promotion of research and development, can pave the way. Innovation and regulation do not have to be mutually exclusive - in the best case scenario, they stimulate each other and lay the foundation for an AI world in which efficiency, safety and ethics go hand in hand.

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