EU AI Act Enters Force as Europe Debates How to Regulate and Scale

The EU AI Act's rules for general-purpose AI models came into force on 2 August 2026. The European Commission had planned to finalise its code of practice for those models in July. The European Parliament would then adopt its position on the standards.

"This is a big, sophisticated technology, and we want to get it right," Eoghan O'Neill, senior policy officer at the AI Office of the European Commission, said at the TNW Conference in Amsterdam on 20 June. "We need specific obligations to capture some of the most impactful or potentially harmful models under the AI Act." O'Neill noted that a broad code of practice group drafted the guidelines. Its members included model providers, civil society organisations, NGOs, academics, AI safety experts, SMEs and European industrial giants.

Not everyone wanted the rules to arrive on schedule. Swedish Prime Minister Ulf Kristersson, Bosch CEO Stefan Hartung and the tech lobbying group CCIA Europe intensified calls to postpone the roll-out. CCIA Europe's members include Alphabet, Meta and Apple, according to The Next Web.

What the rules cover

The Act's first phase puts obligations on chatbots, deepfake generators and high-risk algorithms, among other systems. The Commission framed the code as a way to pin down duties for the models it considers most capable, rather than treating every AI system the same way.

The political fight is not only about safety. European tech leaders argue the bloc's problem is scale, not ambition. Fabrizio Del Maffeo, chief executive of Netherlands-based chip company Axelera AI, told the TNW Conference that overlapping European and national rules create borders inside the single market.

"Europe is not the United States," he said. "We have many languages, many markets, and many regulations, both European and local. And these are stifling growth because they create borders, making it difficult for companies to expand."

Del Maffeo said his company had signed a petition for EU Inc, a proposal for a standardised legal entity that would let startups operate more easily across member states. The plan would sit under the bloc's 28th regime, a pan-European legal framework. In a speech at Davos in January, Commission President Ursula von der Leyen said the rules would combine corporate law, insolvency, labour law and taxation in one framework, according to The Next Web.

The funding numbers give the complaint some weight. European startups raised about $52bn in venture capital last year, against $209bn for their US counterparts. Europe accounts for just 8% of the world's scaleups, compared with 60% in North America. No EU-founded startup in the past 50 years has passed a €100bn valuation, the same report said.

Peter van der Putten, director of the AI Lab at software firm Pegasystems, said the EU needed to become more attractive to both domestic and international investment. He argued that rules could be adjusted so funding leaving the US flows into Europe.

Elise de Reus, co-founder of Cradle, pointed to a different lever: talent. She said European engineers who had worked at Big Tech companies in the US were returning, drawn by purpose-driven work and quality of life.

"We're also maybe a little bit too modest. We should measure happiness, not GDP, which is not a sustainable metric. I don't think we should copy and paste the American system."

That argument cuts against the delay campaign. If the Act is meant to make European AI trustworthy enough to buy, the same rules that raise compliance costs for US model providers also set the terms on which European firms can sell into their home market.