AI Update for 2026
As AI continues to transform the business landscape, staying ahead of legal developments in this space has never been more critical. Global regulation poses a particular challenge, with jurisdictions adopting divergent approaches amid fierce international competition and concerns that excessive regulation could hinder innovation. The unique way AI systems are trained and operate creates unique legal issues, prompting new legislation, guidance, and case law.
Key Developments in AI Regulation
This update will help navigate the evolving web of digital regulations across:
- AI-specific regulation
- Intellectual property
- Data privacy
- AI litigation
- Competition law
AI-Specific Regulation
Regulators worldwide share concerns about AI risks. However, their approach to regulation varies significantly, reflecting today’s complex geopolitical landscape. For instance, the US pursues a strongly pro-innovation, light-touch stance at the federal level, while the EU has enacted a comprehensive AI legislative package. The AI Act has been in force since August 2024, with staged implementations over two years.
Currently, the focus on the EU’s competitiveness and the publication of its digital omnibus means some of the high-risk AI rules set to apply this summer are being delayed. Proposed changes to the Act include extending exemptions for SMEs and reinforcing the powers of the AI Office to oversee AI systems built on General Purpose AI (GPAI) models.
The UK maintains a sector-specific approach to AI regulation, with discussions about introducing an AI Bill, expected to be broader than originally planned and covering AI safety and possibly intellectual property.
Intellectual Property
2025 was a significant year for AI and intellectual property (IP), a trend likely to continue into 2026. The UK government is set to publish two AI and copyright-focused reports by March 18, 2026. These reports will address balancing the rights of AI developers and rights holders for AI training purposes and copyright protection for AI-generated outputs.
On the disputes front, the UK Court of Appeal is expected to hear Getty’s appeal regarding secondary copyright infringement with generative AI provider Stability AI.
Data Privacy
AI remains a major focus for data privacy regulators, who seek to balance innovation with individual protection. The UK’s Data (Use and Access) Act 2025 will relax data protection rules for AI, particularly around automated decision-making.
Both the UK and EU data protection authorities are enhancing their AI enforcement activity, focusing on developers and corporate deployers of AI solutions where tools pose real privacy risks to individuals.
AI Litigation
With the rise of AI comes an increased risk of litigation. The opacity of AI models and the potential for inaccurate outputs create fertile ground for substantial claims against developers and businesses deploying these technologies. Regulators are also monitoring “AI washing,” where false claims about AI usage occur.
Fundamental questions of legal liability remain unresolved. Responsibility for AI-driven errors could rest with the developer, the deploying organization, or even the AI model itself.
Competition Law
Competition authorities worldwide are closely monitoring AI markets for both innovation potential and the risk of entrenched market positions. The UK Competition and Markets Authority (CMA) has been reviewing non-traditional transaction structures under merger control rules.
On the antitrust front, authorities are moving beyond theoretical discussions to bring real enforcement cases, with algorithmic collusion at the center of current litigation.
Adapting to an AI Age
As AI reshapes industries and challenges legal frameworks, organizations must adopt practical AI governance frameworks that fit within their risk appetite and manage specific risks linked to their AI use cases.
