There’s no evidence of harm to warrant tight oversight. These companies are already struggling with high costs to comply with existing rules operating across different EU countries, on top of extremely high energy prices, tight supplies of raw materials and soaring tariffs for steel in their main growth market, the US.
Let’s take a deep breath. We need balanced regulation for AI and it’s worth taking the time to make sure we get it right. Failing to do so means Europe may not be able to scale up investments in AI, beyond the paltry 7.5% of the global total that it spends now.
The cost of not acting is huge. A small company with 50 workers that makes an AI tool in one of these industries could fall under the high-risk category in the AI Act’s Annex I. That instantly means initial costs of compliance between €320,0001 and €600,0002. On top of that, it will face costs of up to €150,000 a year going forward.
That’s a heavy drag on smaller firms, eroding up to 40% of profits.
It doesn’t have to be this way. We could take the time now to postpone the AI Act application deadline and keep talking about what really needs to be high-risk under the law.
These companies – like manufacturers of machines, medical devices and radio equipment – are already governed by the world’s strictest rules for their sectors to ensure their products are safe.
We need balanced regulation for AI and it’s worth taking the time to make sure we get it right
Of course, we should detect gaps in existing frameworks and tweak them to address AI if necessary. But we should remember that there have been no red flags in these sectors to date. Instead, we risk adding an extra layer of regulation if AI tools – designed to improve how they operate – are designated as high-risk under the AI Act.
Products and services will still be safe if companies already regulated under product safety frameworks are moved from the AI Act’s Section A of Annex I to the more flexible approach offered by Section B.
The EU will still be able to offer safe AI if the European Parliament and the Council ask the European Commission to postpone AI Act application deadlines. This would give some time to continue the discussion on these and other necessary changes, similar to the breathing space granted to the sustainability omnibus last year.
The benefits could be enormous. There are 2.2 million manufacturing companies and 38,000 medical devices manufacturers across Europe. They provide 30 million jobs.
Many of those companies are keen to ride the AI revolution to develop AI-based safety functions for industrial equipment, AI-enabled medical technology or AI-powered radio equipment and connected industrial products.
AI can help us do more, do it better and do it faster.
These products are already regulated with the possibility to add more oversight if new risks appear. It’s heavy-handed to add an entire new legal framework when there’s already a good one in place.
The EU will still be able to offer safe AI if the European Parliament and the Council ask the European Commission to postpone AI Act application deadlines
There’s been a lot of tech regulation over the past six years: nearly 40 new regulations. Some of these repeat the same requirements. Some overlap. Some clash with each other.
Each regulation costs money and time to comply with. This weighs down the entire economy. DIGITALEUROPE estimates that it costs €3.3 billion a year to comply with the AI Act, €60.2 billion a year to comply with cybersecurity regulations and €235 million to comply with Data Act data-sharing requirements3.
Our members say that overall compliance costs have increased by 13% over the past six years. They need to pay workers to collect information and create the correct reports, they need to pay lawyers and consultants to get the compliance right. They may also need to use up workers’ time to recode or change products to meet new rules.
This is hard to bear when energy costs are also rising, when global trade has become fraught, when planning for an uncertain future has become much harder.
In real terms, this hits our future. Paying more in compliance costs could reduce AI investment by 20%. And, to repeat, at 7.5% of the global total, the EU’s investment in AI is already well behind the US and China.
Mario Draghi’s 2024 report called for the EU to spend up to €800 billion in extra investment every year to be able to remain competitive. That’s hard to do when complying with overcomplicated rules could also cost the EU around €500 billion every year under some estimates4.
DIGITALEUROPE has seen several cases of companies that decide not to move on with an AI project due to the cost or difficulty of complying with extra regulation.
There’s been a lot of tech regulation over the past six years: nearly 40 new regulations. Some of these repeat the same requirements. Some overlap. Some clash with each other
A manufacturer suffering from repeated night-time production shutdowns – caused by animals triggering safety light barriers – developed an AI camera to reduce false alarms and distinguish between people and other objects.
It assessed the AI Act requirements – extended technical documentation, data protection impact assessments, bias evidence, penetration testing, post-market monitoring and the potential involvement of regulatory authorities.
It abandoned the project.
Sometimes it’s just the burden of paperwork that could kill innovation. One of Europe’s largest automotive companies has built an AI platform for employees to automate specialist tasks. The workers have been enthusiastic and have helped generate 300 new apps every week that could make their lives easier.
However, the AI Act can mean that each of those apps could be classified as a new generative AI model. Each would need to supply documentation to comply with the law. This could become ludicrous; a tool that could save time and money would end up costing time and money.
DIGITALEUROPE understands that legislators want to be quick and efficient in getting a deal fast on the AI omnibus.
We’d like our companies to move fast and do things better too. Giving them more time and more flexibility, especially at a moment when Europe’s businesses face so many challenges, could be game changer here.
We’ve got the market – 440 million consumers and 23 million companies – we’ve got the ideas – 17% of the world’s patent applications – and we’ve got the skills, with18% of top-tier AI talent.
Now please give us a chance.
List of references
- European Commission study supporting the impact accessment of the AI regulation, 2021. https://digital-strategy.ec.europa.eu/en/library/study-supporting-impact-assessment-ai-regulation
- The German AI Association Study (2025) provides figures of an annual operational cost of €300,000, more than €200,000 for certification and €100,000 for personnel. https://ki-verband.de/wp-content/uploads/2025/05/Study_European-AI-Standards_FINAL_20250325.pdf
- DIGITALEUROPE, Executive brief: Removing regulatory burden for a more competitive and resilient Europe, available at https://cdn.digitaleurope.org/uploads/2025/09/DIGITALEUROPE-THE-EXECUTIVE-BRIEF.pdf
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DIGITALEUROPE estimate based on Draghi (2024), adjusting the 2014 compliance cost estimate to current economic scale. See https://www.digitaleurope.org/news/digitaleurope-survey-stronger-growth-conditions-are-needed-in-europe/
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