EU's new AI Act enforcement begins today and most startups say they aren't ready - Silicon Canals

"The initial phase targets what the regulation classifies as "unacceptable risk" AI systems - including social scoring, real-time biometric surveillance in public spaces, and manipulative AI designed to exploit vulnerabilities. Penalties for violations can reach €35 million or 7% of global annual turnover, whichever is higher. For a seed-stage startup, that's not a fine. That's an extinction event."

"According to a survey from the European Digital SME Alliance, more than 60% of small and medium-sized tech companies say they are not adequately prepared for compliance with any phase of the AI Act. Nearly half reported that they hadn't yet conducted a risk classification of their own AI systems - a foundational first step."

"The AI Act uses a tiered risk framework. Today's enforcement covers only the top tier - prohibited practices. The heavier obligations around "high-risk" AI systems (think hiring tools, credit scoring, medical diagnostics) won't kick in until August 2026. General-purpose AI model rules land in August 2025."

The EU's AI Act enforcement provisions officially take effect on February 2, 2025, targeting "unacceptable risk" AI systems including social scoring, real-time biometric surveillance, and manipulative AI. Violations carry penalties reaching €35 million or 7% of global annual turnover. The regulation uses a tiered risk framework, with today's enforcement covering only prohibited practices. High-risk AI system obligations begin in August 2026, and general-purpose AI model rules arrive in August 2025. A survey reveals over 60% of European tech SMEs feel unprepared for compliance, with nearly half having not conducted risk classification of their AI systems. The readiness gap stems from regulatory ambiguity, as the EU's AI Office continues developing guidelines and technical standards.

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