THE EUROPEAN AI ACT: PROMISES, PERILS & TRADE-OFFS IN A COMPLEX REGULATORY ECOSYSTEM

This chapter analyzes the European Union's Artificial Intelligence Act (AIA), Regulation (EU) 2024/1689, the world's first comprehensive legal framework governing AI. It examines the AIA's key features, objectives, and staggered implementation timeline (2024-2030). Central to the analysis is the AIA's risk-based approach, which categorizes AI systems into unacceptable, high, systemic (General-Purpose AI), limited, and minimal risk tiers, imposing obligations proportionate to the potential harm to safety and fundamental rights. The paper details the stringent requirements for high-risk systems (e.g., risk management, data governance, transparency, human oversight, conformity assessments) and the transparency obligations for limited-risk systems. It explores the AIA's position within the complex EU regulatory ecosystem, analysing its interactions and potential conflicts with GDPR, DSA, DMA, and product safety/liability legislation. The inherent tension between the AIA's twin aims – fostering the internal market and innovation versus protecting fundamental rights – is critically assessed, highlighting the necessary trade-offs. Provisions designed to support innovation, particularly for SMEs and research (e.g., regulatory sandboxes, R&D exemptions, fee reductions), are evaluated against potential compliance burdens and technical constraints. The paper further discusses the AIA's potential extraterritorial impact ("Brussels Effect"), its capacity to adapt to future technological advancements, its implications for EU competitiveness, and the lessons it offers for global AI governance, concluding on the need for ongoing evaluation and international cooperation.