The AI Act & SMEs: How can the AI Act support innovation?

Together with the Focus Group Artificial Intelligence (AI), DIGITAL SME has developed a Fact Sheet: AI Act & SMEs. The Fact Sheet outlines key concerns voiced by SME experts, and provides proposals for the development of a responsible, trustworthy and innovative AI ecosystem.

On 21 April 2021, the European Commission proposed the European AI Act. In a nutshell, the AI Act defines rules to ensure that AI applications will be safe and ethical: For instance, the Act bans general social scoring and biometric surveillance, and puts stringent rules and processes in place to ensure that AI is safe when applied in areas such as manufacturing, medical devices, and others.

According to the European Commission, the AI Act intends to position European businesses as frontrunners in ethical and safe AI solutions. However, a highly regulated approach may limit the innovativeness of SMEs. Innovation and over-regulation are some of the key concerns SMEs experts have voiced in the Fact Sheet: AI Act & SMEs. Why is this the case? SMEs often provide tailor-made and agile software solutions, including AI applications, rather than off-the-shelf software. Therefore, a highly regulated and standardised approach may limit innovation by smaller players, and favour larger players. “We have to ask ourselves if we want AI innovators in Europe to inspire, or if we want them to worry about compliance”, said Mislav Malenica, CEO & Founder of Mindsmiths, a Croatian AI start-up, at a debate on the AI Act hosted by Dragos Tudorache, the Member of the European Parliament in charge of the file.

Among other concerns, the SME experts have also found that the definition of AI proposed in the Act is too broad. The Fact Sheet points this out further: “The AI Act includes in its definition in Annex I ‘statistical approaches, Bayesian estimation, search and optimisation methods’.” These optimisation methods are widely applied as common practice in many areas, including statistics or insurances, and cannot be considered AI.

AI can help to develop better products and services, be it in health, manufacturing, agriculture. However, in order for AI to be beneficial to society and the economy, Europe needs innovative businesses that develop these solutions. Therefore, it is essential that the European AI Act supports a thriving and innovative digital economy, which allows SMEs and start-ups to bring agile and innovative AI applications to the market.

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