The EU’s New AI Law and Its Implications for Czechia
The EU’s newly approved Artificial Intelligence (AI) Act, which came into force on April 1, aims to enhance privacy protection and create legal certainty for businesses across all member states. However, experts in Czechia warn that these regulations could stifle innovation and deter investment in the region.
What Exactly Does the Act Do?
The new regulation introduces stricter rules on artificial intelligence applications, banning high-risk uses such as real-time facial recognition and automated CV screening for job applications. AI systems are classified into four categories based on their risk levels, with a focus on high-risk and prohibited systems.
The law prohibits AI systems that manipulate or deceive individuals, exploit vulnerabilities, or discriminate unfairly. It also bans systems that:
- Assess criminal risk based on personality traits
- Develop databases without consent
- Infer emotions in certain settings
- Use biometric data to deduce sensitive information
Moreover, it restricts real-time remote biometric identification in public spaces for law enforcement, except in specific high-risk situations. Companies failing to comply with these prohibitions could face fines of up to EUR 35 million (approximately CZK 874 million) or up to 7 percent of their total annual turnover.
Industry Perspectives
Supporters of the law argue it will safeguard citizens’ rights, with advocates like Petra Stupková from the Czech Association of Artificial Intelligence stating, “We do not want a social scoring system like in China, and the AI Act should help prevent that.” However, she acknowledges that some restrictions may require adjustments to foster research and innovation.
Conversely, critics argue that the AI Act adds another layer of bureaucracy, making Europe less attractive for AI investment. Last year, U.S. companies poured around USD 100 billion (about CZK 2.3 trillion) into AI development, significantly outpacing European investments. Countries in the Middle East and China are also advancing faster in AI investment and adoption.
Jan Romportl, an AI expert, noted, “The EU lacks its own foundational AI models, social networks, and distribution channels. We are already falling behind, and another regulation will only worsen the situation.”
A Slippery Slope?
A critical concern is the potential for exemptions that could allow restricted AI applications, such as facial recognition in specific scenarios. For example, Prague’s Václav Havel Airport already utilizes AI-powered security cameras, and lawmakers are debating their implementation in football stadiums for enhanced safety. Critics warn this could lead to misuse.
Czech MP Patrik Nacher supports the idea but cautions against broader applications, stating, “I wouldn’t want this to become a slippery slope, where facial recognition expands from stadiums to nightclubs and eventually to restaurants.”
The Risk of Stifled Innovation
Beyond startups, larger technology firms may reconsider their presence in the European and Czech markets due to the high compliance costs associated with these regulations. The AI Act includes substantial penalties based on a company’s total turnover.
Zdeněk Valut, director of YDEAL Group, warned, “One day, even tech giants like Meta might decide enough is enough.” Patrik Tovaryš of Meta echoed these sentiments, suggesting that regulation has often hindered rather than encouraged innovation in Europe.
With Western firms potentially scaling back, there are fears that Chinese companies could step in, increasing their influence over European AI infrastructure. Valut explained, “China often offers investment in digital governance in exchange for using its AI tools,” posing a significant risk of European data falling into foreign hands.
