European Union’s AI Act Plans to Target American Open-Source Developers and API Access

IBL News | New York

The European Union amended AI Act on May 11th, 2023. If passed and enacted, it would ban U.S. companies such as OpenAI, Amazon, Google, and IBM from providing API access to generative AI models. This amended act would also sanction American open-source developers and software distributors, such as GitHub if unlicensed generative models became available in Europe.

This means that any model that is made available in the European Union without first passing extensive and expensive licensing would be subject to massive fines of €20 million or 4% of worldwide revenue.

Essentially, the European Union is threatening to sanction an important part of the American tech ecosystem by ordering large tech companies to put small businesses out of business.

The AI Act has extraterritorial jurisdiction. If enacted, enforcement would be out of the hands of EU member states. A European government could be compelled by third parties to seek conflict with American developers and businesses.

Open-source developers, including open-source LLMs, would have to register their “high-risk” AI project or foundational model with the government and expensive risk testing would be required. Registration will also require disclosure of data sources used, computing resources (including time spent training), performance benchmarks, and red teaming.

APIs — meaning, third parties implementing an AI model without running it on their own hardware — would be essentially banned. That would include implementation examples like AutoGPT and LangChain.

However, European small businesses are exempt from undergoing a stringent permitting review project before launch.

Third parties would have the ability to file lawsuits to force a national AI regulator to impose fines.

American experts said that “this is a deeply corrupt piece of legislation; the most likely effect of such a policy is to create a society where the elite have access to R&D models, and nobody else – including small entrepreneurs.”