Regulatory uncertainty is holding back AI adoption – here’s what the industry needs going forward

Confusion surrounding AI regulation is holding back adoption rates in Europe according to AWS.

Citing a blog published earlier this year, AWS’ head of AI and generative AI policy Sasha Rubel told ITPro that customers say a lack of regulatory clarity is hampering AI adoption and holding back the region from potentially unlocking €600 billion by 2030.

The blog revealed that 21% of European businesses identify compliance and legal uncertainties as a barrier to their adoption of the technology, rising to 45% among businesses that are already using multiple AI technologies.

Businesses with these concerns plan to invest 48% less in technologies over the next three years compared to those without the barrier, the blog said.

A previous report from AWS expanded on these findings, revealing businesses that identify compliance and legal uncertainties as a barrier to digital technology adoption typically report 24% less tech investment over a one-year period, and 48% over a three-year period.

This report identified several key areas holding back adoption from a regulatory standpoint, the first being that new regulations can create uncertainty and delays in uptake which can hold back scaling.

Another was that regulations are not always updated, meaning regulatory frameworks are not agile enough to accommodate the speed of innovation. The conversation around how AI systems are defined is important too, according to Rubel.

“One of the biggest conversations that happen in the framework of the EU AI act is how do you define AI system in a way so that you’re not regulating, for example, the use of everyday spreadsheets,” Rubel said

“That, going back to my first point in terms of the framing of the conversation, actually contributes to a lot of regulatory uncertainty. We have a lot of customers coming up to us to say what exactly is in scope in this regulation,” she added.

Research from earlier this year found that 29% of businesses in Europe have concerns that the EU act is too confusing, and that it may prove difficult to comply with its guidelines.

How different regions are tackling regulation

With AI changing and evolving at such a rate, many countries are in different stages when it comes to regulation. The EU was one of the first to launch a comprehensive approach to the technology with its EU AI Act back in March.

But other countries have pursued a different strategy with regard to regulation of the technology. The UK, for example, has taken a less clear-cut approach, playing a part in overseas summits and leaning into a global policy-shaping role that puts innovation at the fore.

Rubel hailed the UK’s approach in particular as a positive stance, with the country placing a strong emphasis on balancing safeguards and responsible use while enabling businesses to innovate.

“The UK, from my perspective, has adopted a very pro-innovation approach to AI, which has the principles, has the responsibility and safety and trustworthiness at its heart, but also has a huge attention to what this would represent if we missed use of AI, instead of just the misuse of AI,” Rubel said.

What is ultimately essential, Rubel thinks, is that whatever the approach is, it builds on international standards and alignment through mechanisms such as the Organisation for Economic Co-operation and Development (OECD), the G7, or the G20.

What does regulatory clarity look like?

Regulatory clarity is centered around a few separate ideas for Rubel, based on the conversations AWS has with its customers.

“The first is understanding what is being regulated and what is not, and that’s linked to the question of an AI system,” Rubel said.

The second is to do with risk levels, Rubel added. When a technology is being deployed in a particular scenario, businesses need to know what to do in order to comply with a particular regulation.

It can be very confusing to understand compliance in the context of the interplay between the EU AI Act, GDPR, the EU copyright directive and so on, Rubel said. Without an army of lawyers and policy specialists, she said, it can be hard to navigate.

“Regulatory clarity looks like understanding what is in scope, what kind of risk level your use case represents, and how to comply with local regulations at the national, regional and international level, so you can make your product available in a safe and responsible way,” she concluded.