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Europe’s proposed A.I. law could cost its economy $36 billion, think tank warns

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Key Points
  • The Artificial Intelligence Act — a proposed law put forward by the European Commission, the executive arm of the EU — will be the "world's most restrictive regulation of AI," according to the Center for Data Innovation.
  • It argues that the "compliance burdens" will cost European businesses 10.9 billion euros per year by 2025, or 31 billion euros over the next five years.
  • AI is already being used to power products for the likes of Google, Apple and Facebook but lawmakers in Europe are concerned about its impacts.
The German Aerospace Center (DLR) is among space agencies working on automated and AI farming techniques for the coming era of interplanetary human colonies.
DLR

LONDON – A new law designed to regulate artificial intelligence in Europe could end up costing the EU economy 31 billion euros ($36 billion) over the next five years, according to a report from Washington-based think tank the Center for Data Innovation released on Sunday.

The Artificial Intelligence Act — a proposed law put forward by the European Commission, the executive arm of the EU — will be the "world's most restrictive regulation of AI," according to the center.

"It will not only limit AI development and use in Europe but impose significant costs on EU businesses and consumers," the organization said in the report.

The commission said it disagrees with the findings of the report and that they appear to be flawed.

The Center for Data Innovation argues that a small or mid-sized enterprise with a turnover of 10 million euros would face compliance costs of up to 400,000 euros if it deployed a high-risk AI system. Such systems are defined by the commission as those that could affect people's fundamental rights or safety.

"That designation sweeps in a broad swath of potential applications — from critical infrastructure to educational and vocational training — subjecting them to a battery of requirements before companies can bring them to market," the center said.

It argues that the "compliance burdens" will cost European businesses 10.9 billion euros per year by 2025, or 31 billion euros over the next five years.

The commission questioned the calculations. "Instead of multiplying the percentage cost with the investment for high-risk AI applications, the numbers in the report are a result of multiplying with all AI investments," it said.

"Instead of multiplying the percentage cost with the investment for high-risk AI applications, the numbers in the report are a result of multiplying with all AI investments.

"The commission has repeatedly asserted that the draft AI legislation will support growth and innovation in Europe's digital economy, but a realistic economic analysis suggests that argument is disingenuous at best," said Ben Mueller, senior policy analyst at the Center for Data Innovation and author of the report.

He added: "The rosy outlook is largely based on opinions and shibboleths rather than logic and market data."

AI is already being used to power products for the likes of Google, Apple and Facebook but lawmakers in Europe are concerned about its impacts.

While the technology has the potential to be a force for good in areas like health care and climate modeling, it could also be used in deadly autonomous weapons or to give every person in a population a social "score." 

Meanwhile, machines that can learn how to do tasks typically done by humans could potentially eradicate millions of jobs.

The Center for Data Innovation is a part of the nonprofit, nonpartisan Information Technology and Innovation Foundation, which is backed by the likes of Amazon, Apple, Microsoft and NBCUniversal, parent company of CNBC.