The EU AI Act applies to any business whose AI systems affect EU citizens — even if you're not in Europe. Like GDPR, it has global reach. Here's what it means and what to do.
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If your AI system interacts with EU users, processes EU citizen data, or outputs results used in the EU — you're covered. This includes:
- US companies with EU customers
- Japanese firms selling to Europe
- Any website with AI chatbots serving EU visitors
- AI-powered products available in EU markets
- Companies using AI to make decisions about EU residents
Risk Categories
| Risk Level | Examples | Requirements |
|---|---|---|
| Unacceptable (banned) | Social scoring, manipulation, real-time biometric ID | Must not be used |
| High risk | Hiring, credit scoring, medical, critical infrastructure | Full compliance: risk assessment, logging, human oversight, transparency |
| Limited risk | Chatbots, deepfakes, emotion detection | Transparency: users must know they're interacting with AI |
| Minimal risk | Spam filters, recommendations, search | No specific requirements |
Penalties
- Up to 7% of global annual revenue or €35M (whichever is higher) for prohibited AI practices
- Up to 3% of global revenue or €15M for other violations
- Up to 1.5% of global revenue or €7.5M for providing incorrect information
For a $10M company, that's up to $700,000 for a single violation. For a $100M company, up to $7M.
What to Do Now
- Inventory your AI: List every AI system you use and what it does
- Classify risk: Categorize each system by the EU AI Act risk levels
- Assess EU exposure: Do you serve EU users? Process EU data?
- Implement transparency: Disclose when users interact with AI
- Add human oversight: For high-risk systems, ensure humans can review and override
- Document everything: Risk assessments, testing, monitoring logs
- Get legal counsel: If you have EU exposure, talk to a lawyer who specializes in AI regulation
7%
Max penalty of global revenue
4
Risk categories
Global
Extraterritorial reach
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