How would regulating general purpose AI impact startups?

January 17, 2023

We are following the discussions on the European Commission’s proposal on AI Act and its impact on the startup ecosystem. Startup communities in the EU are particularly concerned about the regulation of general purpose AI, which is a key element of innovation. Here’s why: 

What is general purpose AI?

A general purpose AI system is an Artificial Intelligence system that is intended by the provider to perform generic and widely applicable functions (e.g. language processing, image and speech recognition, audio and video generation, pattern detection, question answering, translation, etc.). Such a system can be integrated into other AI systems, in different fields, in order to perform different tasks, in a variety of contexts, often without substantial modification. General purpose AI systems are widely used as pre-trained models for the development of more specialised AI systems. For example, a single general purpose AI system for language processing can be used as the foundation for a wide range of more specialised AI systems such as translation, chatbots, ad generation, etc. 

General purpose AI systems are increasingly useful for startups due to their scale (a lot of memory, data and powerful hardware) and their reliance on transfer learning (applying knowledge from one task to another), and startups use them for different applications in a range of fields across the AI value chain. General purpose AI obligations enshrined in the AI Act, in their current form are written with large models from BigTech in mind, but many European startups are in the scope, too. A recent report indicated that 45% of the surveyed startups consider their AI system to be general purpose AI, making them subject to the obligations of general purpose AI providers. 

Startups active across the AI value chain can be “initial” and “subsequent” providers as well as users of general purpose AI systems. 

We ask the European Parliament to consider that regulating general purpose AI will likely create significant entry barriers for smaller players such as startups. The entire ecosystem will be affected as this will diminish the number of actors operating as “initial providers” overall and consequently limit the supply of general purpose AI systems available for startups-users of general purpose AI. 

Policy makers: Ensuring that: 1) any regulatory approach of general purpose AI respects the AI Act’s risk-based approach 2) takes into account the financial and technical realities of startups, and 3) ensures a balanced allocation of responsibilities across the AI value chain will allow for the AI startup ecosystem to flourish