The EU AI Act Is Here—But Will It Lead the World Forward or Hold It Back?
The long-anticipated EU Artificial Intelligence Act marks a defining moment in the global governance of AI. Hailed as the world’s first comprehensive legal framework targeting AI development and deployment, the legislation introduces a risk-based classification system and compliance obligations intended to ensure transparency, safety and ethical standards across AI technologies.
But among innovators, regulators and startup leaders, the act has stirred a deeper debate: Will regulatory clarity drive innovation, or will strict rules end up pushing progress elsewhere?
To explore both sides of this global inflection point, we turned to the AI Think Tank—a diverse collective of industry pioneers, technologists and strategists shaping the next generation of AI tools and systems.
“Clear rules help businesses operate with confidence, but if regulations become too restrictive, they might push great, worthy research elsewhere.”
Clarity vs. Compliance: Walking the Line Between Progress and Protection
For many, the appeal of the EU AI Act lies in its effort to impose order on an increasingly complex landscape. With AI now deeply embedded in everything from hiring algorithms to critical infrastructure, a regulatory framework brings sorely needed clarity.
Roman Vinogradov, VP of Product at Improvado, sees the risk classification model as a potential strength.
“The EU AI Act’s risk-based classification creates essential regulatory clarity, yet to truly accelerate innovation, policymakers must pair enforcement with targeted incentives… regulatory sandboxes, compliance grants and streamlined certification processes tailored for startups and SMEs.”
Indeed, small and mid-sized enterprises (SMEs) are at the heart of the innovation ecosystem, and without clear support structures, these companies could bear the brunt of compliance burdens.
Sarah Choudhary, CEO of ICE Innovations, echoes this concern from a technologist’s perspective.
“Clear rules help businesses operate with confidence, but if regulations become too restrictive, they might push great, worthy research elsewhere.”
The overarching fear? That Europe could unintentionally create an innovation outflow, where cutting-edge AI projects migrate to regions with fewer barriers.
“The EU AI Act, like much of the proposed regulation, is overly broad and burdensome to startups.”
The Compliance Burden: A Startup Dilemma
Startups, often strapped for resources and under pressure to move fast, may feel the weight of compliance most acutely.
Peter Guagenti, CEO of Integrail, argues that the EU AI Act may be a step too far for small players.
“The EU AI Act, like much of the proposed regulation, is overly broad and burdensome to the startups that represent the biggest opportunity for positive economic and social benefits from AI.”
He points out a dilemma many founders face: either comply and slow innovation—or shift operations to jurisdictions with lighter regulatory oversight.
Jim Liddle, Chief Innovation Officer at Nasuni, also warns of a possible bifurcated future.
“The worry is that the Act risks creating a two-tier development ecosystem where cutting-edge innovation happens outside EU borders while regulated AI evolves more slowly within them.”
And while the EU AI Act does provide structure, its effectiveness could be undermined without global alignment.
“No regional AI regulatory framework can achieve complete effectiveness due to the global nature of AI development and deployment,” Liddle continues. “Genuinely effective AI governance requires international coordination and standards harmonization, but geopolitical competition for AI leadership makes this very unlikely.”
A Global Domino Effect—or Diverging Roads?
While the EU may be first out of the gate, other regions are eyeing different paths to AI regulation. Some may follow Europe’s lead, while others could prioritize economic agility over caution.
Gordon Pelosse, EVP at AI CERTs, breaks it down by region:
“The United States is expected to maintain its competitive edge through a sector-specific regulatory strategy. China maintains stringent AI control measures… The UK, Canada and Australia probably prefer flexible, principle-based guidelines instead of strict regulations.”
This could create a fragmented global regulatory environment, where businesses must navigate a maze of region-specific rules—challenging the scalability of AI solutions and increasing operational complexity.
“Compliance costs and complex approvals could hinder rapid prototyping.”
Suri Nuthalapati, Data and AI Leader at Cloudera, points to the tradeoff this introduces.
“Strict regulations on high-risk AI may slow experimental innovation, particularly for startups. Compliance costs and complex approvals could hinder rapid prototyping and global AI deployments.”
However, Nuthalapati also sees potential upsides.
“By defining AI risk categories, [the EU Act] provides structured guidelines that can accelerate innovation by reducing uncertainty. Businesses can align AI strategies with compliance early, fostering responsible AI development.”
A More Balanced Approach: What’s Next for Global Regulation?
In contrast to the EU’s sweeping framework, some regions may take a more modular or sector-specific approach—especially in tech-heavy economies like the U.S.
Nikhil Jathar, CTO of AvanSaber Technologies, foresees a fragmented beginning but eventual convergence:
“I anticipate other regions will adopt a more nuanced approach, potentially focusing on sector-specific regulations or lighter-touch guidelines. We might see a fragmented global landscape initially, eventually converging on core principles.”
So, what might encourage that convergence? Open dialogue, global forums and cross-border cooperation on shared values like data privacy, human rights and algorithmic transparency.
“We might see a fragmented global landscape initially, eventually converging on core principles.”
Actionable Strategies for Business Leaders
As regulatory landscapes evolve, AI-driven companies must prepare for a future shaped by compliance. Here are five actionable strategies to stay ahead:
- Map Risk Levels
Assess your AI systems against the EU’s risk categories (unacceptable, high, limited, minimal) to understand where your offerings stand. - Build a Compliance Culture
Start integrating compliance teams into the product development lifecycle. Don’t wait for enforcement to begin adapting. - Leverage Regulatory Sandboxes
Where available, participate in regulatory sandboxes to test innovations in controlled environments. - Invest in AI Governance Tools
Use platforms that support compliance automation, documentation, model explainability and audit trails. - Monitor Global Policy Trends
Track AI policy evolution beyond the EU to prepare for a multi-jurisdictional compliance landscape.
The Blueprint, the Burden, and the Balance
The EU AI Act may be a bold first step toward establishing global norms for artificial intelligence, but its ultimate impact depends on how well it balances innovation enablement with risk mitigation. The AI Think Tank members collectively emphasize that while regulatory clarity is welcome, overly prescriptive rules could suppress the very innovations they seek to protect.
The next chapter will be written not only in Brussels but in Washington, Beijing, London, and beyond. For now, one thing is clear: the race to regulate AI is underway—and every region must decide how to compete without compromising its values or economic potential.
