EU Withdraws AI Liability Directive

The European Commission has decided not to pursue the proposed EU AI Liability Directive, initially introduced in 2022, due to a lack of consensus and industry pressure for simpler regulations. This decision was highlighted in the Commission’s 2025 work program, which was presented to the European Parliament. Critics, such as German MEP Axel Voss, argue that the directive was necessary to address liability issues arising from AI-related harms, contrasting with the AI Act’s preventive measures.

Industry lobbyists have expressed concerns that liability rules pose a threat to business models, influencing the Commission’s decision. The Commission’s revised approach aims to simplify the regulatory framework, reducing administrative burdens while fostering innovation and growth within the EU’s digital economy. Commission President Ursula von der Leyen emphasized the importance of uniform safety rules across the EU, highlighting the AI Act’s role in streamlining compliance for businesses.

Despite the Commission’s efforts to simplify regulations, some experts caution that deregulation could lead to increased uncertainty and a fragmented regulatory landscape. This could result in varied national regulations, complicating compliance for companies, particularly small and medium-sized enterprises (SMEs). The potential for increased compliance costs and legal complexities may impact competition within the EU market.

The EU’s broader digital regulatory regime, including the General Data Protection Regulation and the Digital Services Act, continues to present challenges for companies navigating compliance. Legal experts note that the complexity of existing laws and enforcement frameworks can create confusion and hinder business operations. Calls for further deregulation reflect ongoing debates about the balance between innovation and regulatory oversight in the EU’s digital economy.