​Digital advocacy group criticizes current scope of the EU AI Act

In an open letter signed by members of Digital Europe, the group warned that over-regulation of the AI industry could negatively impact the region’s ability to become a global leader in the technology.

Digital Europe, an advocacy group that represents digital industries across the continent, has released a joint statement ahead of the EU’s AI Act’s final weeks of negotiations, warning that over-regulation could stymie innovation and cause startups to leave the region.

The group’s core argument is that the AI Act now goes beyond its original intended scope, and should instead remain focused on high-risk use cases, rather than being directed at specific technologies. Digital Europe also warned that the financial burden the Act could place on companies wanting to bring AI-enabled products to market could make operating out of the EU unstainable for smaller organizations.​

“For Europe to become a global digital powerhouse, we need companies that can lead on AI innovation also using foundation models and GPAI (general-purpose AI),” the statement read. “As European digital industry representatives, we see a huge opportunity in foundation models, and new innovative players emerging in this space, many of them born here in Europe. Let’s not regulate them out of existence before they get a chance to scale, or force them to leave.”

The letter was signed by 32 members of Digital Europe and outlined four recommendations that signatories believe would allow the Act to strike the necessary balance between regulation and innovation. These include ensuring a risk-based approach remains at the core of the AI Act; better aligning the Act with existing product safety legislation; and ignoring calls for the regulation to tackle copyright issues.

“The EU’s comprehensive copyright protection and enforcement framework already contains provisions that can help address AI-related copyright issues, such as the text and data mining exemption and corresponding,” the statement read.

Concerns of over-regulation have been previously raised

In June, 163 prominent executives representing some of Europe’s biggest technology and business companies, including Airbus, ARM, Capgemini, Schneider Electric, and Siemens, signed an open letter urging the EU to adopt a more hands-off approach to AI regulation, worrying that the draft AI Act would make the continent less competitive in the fast-growing field.

Although the AI Act was approved by the European Parliament in June, it needs to be ratified by each EU country before it becomes law.

While there is widespread consensus from countries regarding labeling requirements and safeguards to protect against AI-generated content, there has been some backlash around the proposed bans of biometric surveillance in public settings and so-called “social scoring” systems, which classify people based on their social behavior, socio-economic status, and personal characteristics.

When the AI Act does eventually become law, non-compliance will result in penalties of up to $21.8 million (€20 million) or 4% of global turnover.

Sam Altman returns to OpenAI after agreement reached

Sam Altman is to return to OpenAI within days of his departure and the company appointing two interim CEOs during the period, OpenAI announced in a post on X.

“We have reached an agreement in principle for Sam Altman to return to OpenAI as CEO with a new initial board of Bret Taylor (Chair), Larry Summers, and Adam D’Angelo,” OpenAI said in an update posted to the social media platform X, formerly known as Twitter.

Altman’s departure late last week from the AI startup because of a conflict with the board was the subject of much speculation, as the reasons weren’t clearly spelled out.

“I love OpenAI and have acted to preserve our team and mission. Joining Microsoft was the best decision for us, and with a new board and Satya's support, I'm excited to return to OpenAI and strengthen our partnership with Microsoft,” Altman posted.

Initially, former Twitch CEO Emmet Shear was set to replace Altman.

“It’s clear that the process and communications around Sam’s removal has been handled very badly, which has seriously damaged our trust,” Shear said on Monday in a posted on X.

Before Shear took over the role of interim CEO at OpenAI, the company had appointed OpenAI CTO Mira Murati as the interim CEO on Friday. It’s unclear what role Shear or Murati would have in the company after Altman’s return. 

Altman’s firing sparked widespread disapproval in the tech community, drawing comparisons to Steve Jobs’ infamous dismissal and later successful return to Apple.

As many as 747 out of 770 OpenAI employees signed a letter threatening to quit and join Microsoft if Altman was not reinstated.

Altman and other key members, including Greg Brockman, were initially set to join Microsoft  to lead a new AI research team, as announced by Microsoft CEO Satya Nadella,following their departure.

Microsoft is a large investor in OpenAI, and Nadella appeared pleased that Altman was rejoining the startup company.

“We are encouraged by the changes to the OpenAI board. We believe this is a first essential step on a path to more stable, well-informed, and effective governance,” Nadella posted on X. “We look forward to building on our strong partnership and delivering the value of this next generation of AI to our customers and partners.”

The startup has a corporate structure that’s quite unusual by Silicon Valley standards.

OpenAI has been organized as a nonprofit since 2015 and is governed by a board overseeing all activities.

A 2019 thread on YCombinator’s Hacker News forum, written as the firm shifted to a hybrid structure of nonprofit and for-profit entities, sparked debate about its mission shift, profit motives, and the ethical complexities of AI development.

“Investor returns are capped at 100x, that’s quite a high cap for a non-profit,” wrote one user who had skepticism about OpenAI's shift to a hybrid structure and its alignment with its original non-profit ethos. 

Reuters recently reported that some investors are considering suing the company over Altman’s firing; however, the firm’s unique structure potentially shields it from investor lawsuits, legal experts who spoke to Reuters said, and weakens their position in challenging the recent CEO dismissal.