A group of leading CEOs recently sent an open letter to European Commission President Ursula von der Leyen, expressing serious concerns about the current state of the proposed EU Artificial Intelligence Act. They argue that the Act’s complex and overlapping regulatory requirements risk undermining Europe’s competitiveness in the rapidly evolving global AI sector. The CEOs highlight that an overly complicated legal framework could stifle innovation and deter investment, possibly causing Europe to lag behind regions more favorable to AI development. This open letter arrives at a critical moment as EU officials and industry stakeholders actively reevaluate and refine the AI regulatory framework. Central to this process is drafting a “code of practice” designed to help companies navigate compliance with the Act. While the code aims to clarify obligations and ease implementation, many businesses remain cautious due to the perceived ambiguity and complexity of the current provisions. Although the Act remains in the legislative phase and many of its rules are not yet in effect, the business community has voiced significant apprehension. Smaller companies, especially, fear they could be disproportionately burdened by the stringent and intricate regulations. There is concern that compliance hurdles and administrative overhead might hinder broader AI deployment across sectors, limiting innovation and market expansion. In response, EU officials have reaffirmed their commitment to finalizing the code of practice by August. Discussions within the Commission are also underway to simplify the regulatory framework to balance necessary safeguards with fostering technological progress.

These simplification efforts are viewed as crucial to maintaining the EU’s competitiveness in AI development, attracting investment, and encouraging entrepreneurship. Proponents of the legislation stress the importance of upholding high standards for AI safety and ethical use. The European Commission emphasizes the need for harmonized regulations across member states to provide clear, consistent rules that protect citizens while supporting technological advances. Nevertheless, the Commission recognizes that the AI digital framework may need further adaptation to keep pace with the sector’s rapid evolution. Beyond established firms, European AI start-ups and investor groups have strongly criticized the current draft legislation as rushed and potentially harmful to innovation ecosystems. Start-ups worry that regulatory burdens could undermine the agility and creativity essential to their growth, which are vital for maintaining Europe’s standing as a source of pioneering AI solutions. As the debate unfolds, tension persists between regulatory oversight and the promotion of innovation. The European Commission strives to maintain strict standards for AI safety and ethics, while acknowledging the need for a flexible, adaptive regulatory environment that supports businesses of all sizes. The coming months will be decisive for shaping Europe’s AI regulatory future. Finalizing the code of practice and considering legislative simplifications will be crucial to striking an effective balance between societal protection and fostering technological innovation. Industry participants continue to call for transparent dialogue and collaborative policymaking to ensure AI regulation strengthens, rather than hampers, Europe’s digital transformation and economic competitiveness globally.