The European Union’s Artificial Intelligence Act (AIA) represents a
pioneering yet controversial regulatory framework to ensure AI systems’ ethical,
transparent, and accountable development and deployment. As the first comprehensive
AI law, the AIA employs a risk-based approach, prohibiting high-risk applications such
as manipulative techniques and social scoring while imposing strict compliance
obligations on sectors like healthcare, criminal justice, and employment. This
regulation aspires to establish Europe as a global leader in ethical AI governance, akin
to the General Data Protection Regulation in data privacy. However, the AIA has
sparked debate over its potential to hinder innovation, increase regulatory burdens on
startups and SMEs, and drive AI talent and investment away from Europe. Critics
argue that Europe risks overregulating an industry that lacks global leadership and may
become overly dependent on foreign AI technologies. This paper critically examines
the AIA’s implications for technological competitiveness, economic growth, and global
AI governance. It assesses whether the regulation successfully balances ethical
concerns with innovation or whether it imposes constraints that may stifle Europe’s AI
ecosystem. Ultimately, the study underscores the need for a more adaptable regulatory
strategy that promotes trust and technological leadership in the rapidly evolving AI
landscape.
Keywords: General-purpose AI, Global AI standards, Human-centric AI, Innovation regulation, Legal framework, Risk-based approach, Startups, Technological sovereignty, Transparency, Trustworthy AI.
