The EU has long touted itself as the world leader in regulating digital services. It was among the first to regulate the use of cryptocurrencies comprehensively, and later it regulated AI. However, it’s now taking a step back and rolling back some of the AI measures put in place.
This is a significant shift. Instead of introducing all the AI regulatory measures, the EU will pause some of them and listen to feedback from the AI industry and the tech experts behind it.
How We Got Here: The Original Vision of the AI Act
The AI Act was introduced in 2021 and divided AI activities into three categories. The first was known as unacceptable-risk systems, and these were simply banned within the EU. Those include social scoring and biometric surveillance.
High-risk systems are the ones that require authorization and justification from the EU government. Those include: policing, border control, hiring, education, healthcare, and welfare assessments. For the government to approve these, extensive documentation and testing would be required.
Minimal-risk AI tools are basically all others allowed. Some of these are already in place in industries that are prone to innovation. For instance, some Bitcoin gambling sites use AI to provide customer service. According to experts such as those from CryptoManiaks, Bitcoin gambling is safer and faster than gambling using fiat money.
What Exactly Is Being Delayed or Weakened
The most significant change comes for the high-risk systems. Those were supposed to be enforced in 2026, but they’ve now been moved to 2027. In some sectors, the grace period will expand to 2028. Some companies had to overhaul their security systems next year, and now they have more breathing room.
Another issue is technical standards and Codes of Practice. These are the detailed instructions companies must follow to comply with the regulation. All of the enforcement, fines, and conformity-assessment deadlines in the Codes are being pushed further down the line.
There are also changes in the transparency requirements. None of the changes eliminates existing obligations, but they do delay them and provide greater flexibility, particularly regarding data disclosures and risk mitigation plans.
Why the EU Flinched: Lobbying, Innovation Fears, and Geopolitics
The pause didn’t happen on its own. Major tech companies, including the US giants, have lobbied for the change. These included Meta, Google, Amazon, and OpenAI, all of which highlighted the concerns that new regulations will strangle innovation. Some CEOs believed that such measures would also widen the gap between the US and EU industries and markets.
European startups and tech companies lobbied as well. Many argued that they don’t have the resources needed to comply with the complex new regulations and that the deadlines to do so are too short.
There are also geopolitical concerns to take into account. As Brussels seeks to redefine its relationship with the US, the bill could appear too hostile to US IT interests, and there’s political pressure to ease up.
Big Tech’s View: Breathing Room and Strategic Opportunity
The delay is a short-term win for big tech. The companies that build and deploy foundation models avoid the imminent risk of heavy fines. It will also give them enough time to align internal governance policies with the latest rules without being forced into emergency retrofits.
However, this success isn’t without risk. Critics say that the tech industry has completely captured Brussels and that once the new administration comes in, they may set up much stricter policy as a result.
What the Shift Means for Startups and European AI Hubs
European companies, especially tech startups and AI hubs, will also feel the difference now that the regulations are delayed. These early-stage companies will benefit more than big corporations, as they were the ones that didn’t have the resources to keep up with the growing government demands.
The rules, however, favor the large EU tech hubs, and there’s a feeling that the delay will also broaden the gap between them and the small companies. Those with the budget to use the delay to prepare for an omnibus digital regulation would come up on top.
To Sum Up
The EU has introduced one of the first and most comprehensive AI regulations, as it did with cryptocurrencies. Now, it’s backing off from enforcing the law and providing a longer grace period for companies to start implementing the regulations. This is partly the result of lobbying and partly a political decision to ease relations with the US.
The delay will help both international and European companies, especially startups and small businesses. AI is becoming a bigger part of the economy than anyone imagined, and some regulations will need to be put in place once the deadlines expire.
