The European Union has taken a significant step towards clarifying the scope of its new AI Act, publishing guidance on what constitutes an AI system under the risk-based framework. The guidelines, released in a 13-page document, aim to provide clarity for AI developers on whether their software falls within the act's scope, with the first compliance deadline having kicked in last weekend.

The need for guidance is pressing, given the potential consequences of non-compliance. Companies found to be in breach of the AI Act's provisions could face fines of up to 7% of their global annual turnover. As such, the EU's guidance is likely to be closely scrutinized by companies operating in the AI space.

It's worth noting, however, that the guidance is non-binding, and the Commission has emphasized that it is "designed to evolve over time and will be updated as necessary, in particular in light of practical experiences, new questions, and use cases that arise." This caveat acknowledges the rapidly evolving nature of the AI field, where new developments and applications are emerging at a rapid pace.

The EU's guidance document itself is clear that there can be no automatic determination or exhaustive lists of systems that either fall within or outside the definition of an AI system. This means that companies will need to engage in a nuanced and context-dependent assessment of their software to determine whether it falls under the AI Act's scope.

The release of the guidance comes on the heels of the EU's publication of guidance on prohibited uses of AI earlier this week. Together, these documents represent a significant step towards establishing a clear regulatory framework for AI in the EU, and will likely have significant implications for companies operating in the region.

As the AI landscape continues to evolve, the task of understanding how the law applies will likely remain a work in progress. The EU's guidance provides a crucial starting point for companies seeking to ensure compliance with the AI Act, but it will be important for developers to stay up-to-date with the latest developments and updates to the regulatory framework.

In the broader context, the EU's AI Act represents a significant milestone in the development of AI regulation globally. As the first region-wide framework for regulating AI applications, it sets an important precedent for other jurisdictions seeking to establish their own regulatory frameworks. The success or failure of the EU's approach will likely have significant implications for the development of AI policy worldwide.