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Some American companies have agreed to comply with new, voluntary AI standards from European Union regulators, in advance of new regulations set for 2027, but others have decried them as overreach. (Photo by Santiago Urquijo\/Getty Images)<\/p>\n
American companies are split between support and criticism of a new voluntary European AI code of practice, meant to help tech companies align themselves with upcoming regulations from\u00a0the European Union\u2019s landmark AI Act<\/a>.<\/p>\n The voluntary code, called the General Purpose AI Code of Practice<\/a>, which rolled out in July, is meant to help companies jump-start their compliance. Even non-European companies will be required to meet certain standards of transparency, safety, security and copyright compliance to operate in Europe come August 2027.\u00a0\u00a0<\/p>\n Many tech giants have already signed the code of practice, including Amazon, Anthropic, OpenAI, Google, IBM, Microsoft, Mistral AI, Cohere and Fastweb. But others have refused.<\/p>\n In July, Meta\u2019s Chief Global Affairs Officer Joel Kaplan said in a\u00a0statement on Linkedin<\/a> that the company would not commit.<\/p>\n \u201cEurope is heading down the wrong path on AI. We have carefully reviewed the European Commission\u2019s Code of Practice for general-purpose AI (GPAI) models and Meta won\u2019t be signing it,\u201d he wrote. \u201cThis Code introduces a number of legal uncertainties for model developers, as well as measures which go far beyond the scope of the AI Act.\u201d<\/p>\n Though Google\u2019s President of Global Affairs Kent Walker was critical of the code of practice in a company statement, Google has signed it, he said.<\/p>\n \u201cWe remain concerned that the AI Act and Code risk slowing Europe\u2019s development and deployment of AI,\u201d\u00a0Walker wrote<\/a>. \u201cIn particular, departures from EU copyright law, steps that slow approvals, or requirements that expose trade secrets could chill European model development and deployment, harming Europe\u2019s competitiveness.\u201d<\/p>\n The divergent approach of U.S. and European regulators has showcased a clear difference in attitude about AI protections and development between the two markets, said Vivien Peaden, a tech and privacy attorney with Baker Donelson.<\/p>\n She compared the approaches to cars \u2014 Americans are known for fast, powerful vehicles, while European cars are stylish and eco-friendly.<\/p>\n \u201cSome people will say, I\u2019m really worried that this engine is too powerful. You could drive the car off a cliff, and there\u2019s not much you can do but to press the brake and stop it, so I like the European way,\u201d Peaden said. \u201cMy response is, \u2018Europeans make their car their way, right? You can actually tell the difference. Why? Because it was designed with a different mindset.\u201d<\/p>\n While the United States federal government has recently enacted some AI legislation through the Take It Down Act, which prohibits AI-generated nonconsensual depictions of individuals, it has not passed any comprehensive laws on how AI may operate. The Trump administration\u2019s\u00a0recent AI Action Plan<\/a> paves a clear way for AI companies to continue to grow rapidly and unregulated.<\/p>\n But under the EU\u2019s AI Act, tech giants like Amazon, Google and Meta will need to be more transparent about how their models are trained and operated, and follow rules for managing systemic risks if they\u2019d like to operate in Europe.<\/p>\n \u201cCurrently, it\u2019s still voluntary,\u201d Peaden said. \u201cBut I do believe it\u2019s going to be one of the most influential standards in AI\u2019s industry.\u201d<\/p>\n The EU AI Act was passed last year to mitigate risk created by AI models, and the law creates \u201cstrict obligations\u201d for models that are considered \u201chigh risk.\u201d High risk AI models are those that can pose serious risks to health, safety or fundamental rights when used for employment, education, biometric identification and law enforcement, the act said.<\/p>\n Some AI practices, including AI-based manipulation and deception, predictions of criminal offenses, social scoring, emotion recognition in workplaces and educational institutions and real-time biometric identification for law enforcement, are considered \u201cunacceptable risk\u201d and are banned from use in the EU altogether.<\/p>\n Some of these practices, like social scoring \u2014 using an algorithm to determine access to certain privileges or opportunities like mortgages or jail time \u2014 are widely used, and often unregulated in the United States.<\/p>\n While AI models that will be released after Aug. 2 already have to comply with the EU AI Act\u2019s standards, large language models (LLMs) \u2014 the technical foundation of AI models \u2014 released before that date have through August 2027 to fully comply. The code of practice released last month offers a voluntary way for companies to get into compliance early, and with more leniency than when the 2027 deadline hits,\u00a0it says<\/a>.<\/p>\n The three chapters in the code of practice are transparency, copyright and safety, and security. The copyright requirements are likely where American and European companies are highly split, said Yelena Ambartsumian, founder of tech consultancy firm Ambart Law.<\/p>\n In order to train LLMs, you need a broad, high-quality dataset with good grammar, Ambartsumian said. Many American LLMs turn to pirated collections of books.<\/p>\n \u201cSo [American companies] made a bet that, instead of paying for this content, licensing it, which would cost billions of dollars, the bet was okay, \u2018we\u2019re going to develop these LLMs, and then we\u2019ll deal with the fallout, the lawsuits later,\u201d Ambartsumain said. \u201cBut at that point, we\u2019ll be in a position where, because of our war chest, or because of our revenue, we\u2019ll be able to deal with the fallout of this fair use litigation.\u201d<\/p>\n And those bets largely worked out. In two recent lawsuits, Bartz v. Anthropic and Kadrey v. Meta, judges ruled in favor of the AI developers based on the \u201cfair use\u201d doctrine, which allows people to use copyrighted material without permission in certain journalistic or creative contexts. In AI developer Anthropic\u2019s case,\u00a0Judge William Alsup likened the training process<\/a> to how a human might read, process, and later draw on a book\u2019s themes to create new content.<\/p>\n But the EU\u2019s copyright policy bans developers from training AI on pirated content and says companies must also comply with content owners\u2019 requests to not use their works in their datasets. It also outlines rules about transparency with web crawlers, or how AI models rake through the internet for information. AI companies will also have to routinely update documentation about their AI tools and services for privacy and security.<\/p>\n Those subject to the requirements of the EU\u2019s AI Act are general purpose AI models, nearly all of which are large American corporations, Ambartsumain said. Even if a smaller AI model comes along, it\u2019s often quickly purchased by one of the tech giants, or they develop their own versions of the tool.<\/p>\n \u201cI would also say that in the last year and a half, we\u2019ve seen a big shift where no one right now is trying to develop a large language model that isn\u2019t one of these large companies,\u201d Ambartsumain said.<\/p>\n There\u2019s a \u201cchasm\u201d between the huge American tech companies and European startups, said Jeff Le, founder and managing partner of tech policy consultancy 100 Mile Strategies LLC. There\u2019s a sense that Europe is trying to catch up with the Americans who have had unencumbered freedom to grow their models for years.<\/p>\n But Le said he thinks it\u2019s interesting that Meta has categorized the code of practice as overreach.<\/p>\n \u201cI think it\u2019s an interesting comment at a time where Europeans understandably have privacy and data stewardship questions,\u201d Le said. \u201cAnd that\u2019s not just in Europe. It\u2019s in the United States too, where I think Gallup polls and other polls have revealed bipartisan support for consumer protection.\u201d<\/p>\n As the code of practice says, signing now will reduce companies\u2019 administrative burden when the AI Act goes into full enforcement in August 2027. Le said that relationships between companies that sign could garner them more understanding and familiarity when the regulatory burdens are in place.<\/p>\n But some may feel the transparency or copyright requirements could cost them a competitive edge, he said.<\/p>\n \u201cI can see why Meta, which would be an open model, they\u2019re really worried about (the copyright) because this is a big part of their strategy and catching up with OpenAI and Atomic,\u201d Le said. \u201cSo there\u2019s that natural tension that will come from that, and I think that\u2019s something worth noting.\u201d<\/p>\nGeneral Purpose AI Code of Practice<\/h4>\n
Regulations could bring markets together<\/h4>\n