Walking the Tightrope: As Generative AI Meets EU Regulation, Pragmatism is Likely

By: Paul Lee, Lucia Lucchini & Michelle Seng Ah Lee (Deloitte Insights)

Emphasizing the significance of well-defined regulations cannot be overstated in unlocking the potential of any market, especially in the realm of generative AI. Without clear regulatory frameworks, vendors, enterprise clients, and end users may exhibit hesitancy. However, the European Union (EU) is poised to take the lead in establishing global regulations for generative AI in 2024, not only shaping its domestic markets but also providing a model for other regions.

In 2024, two key EU regulations are anticipated to influence the growth of the generative AI market within the region and beyond. These are the General Data Protection Regulation (GDPR), which has been in effect since 2018, and the forthcoming EU AI Act (AIA), expected to be ratified in early 2024. As generative AI sparks discussions on managing issues such as individual consent, rectification, data erasure, bias mitigation, and copyright usage, the trajectory of the industry may hinge on how organizations and regulators perceive, enforce, and handle areas of contention.

Despite potential hurdles, collaborative efforts, manifested through open and transparent dialogues between industry stakeholders and regulators, are likely to yield a pragmatic approach. This approach would strike a balance between regulatory adherence and fostering innovation in generative AI. It follows the trend of discussions held in 2023, which saw regulatory interventions in the EU and other markets. Vendors have adapted their strategies to align with regulators’ requirements, while regulators have facilitated innovation. By addressing the concerns outlined in EU regulations in 2024 while championing the benefits of core technologies, the generative AI market is anticipated to continue its productive evolution.

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