A group of prominent European business leaders has raised significant concerns about the European Union's proposed legislation on artificial intelligence (AI), warning that it could negatively impact the bloc's competitiveness and potentially lead to an exodus of investment.

In an open letter addressed to EU lawmakers on Friday, C-suite executives from companies including Siemens, Carrefour, Renault, and Airbus expressed "serious concerns" about the EU AI Act, which is set to become the world's first comprehensive AI regulation.

The letter also included prominent tech figures such as Yann LeCun, Chief AI Scientist of Meta (formerly Facebook), and Hermann Hauser, the founder of British chipmaker ARM.

The group, consisting of over 160 executives, emphasized that the draft legislation goes too far, particularly in its regulation of generative AI and foundation models, which underpin popular platforms like ChatGPT.

Generative AI has garnered attention this year, with experts warning about the potential negative implications of systems that enable machine-generated content for tasks like writing essays, taking tests, and building websites. Last month, hundreds of experts highlighted the risk of AI-related human extinction, urging global prioritization of risk mitigation alongside other societal-scale threats.

The group argued that the EU proposal's broad application to such software, regardless of its specific use cases, could result in high compliance costs and disproportionate liability risks. They expressed concern that such regulations could prompt highly innovative companies to relocate their activities abroad, leading to a significant productivity gap between Europe and other regions.

The executives called for policymakers to revise the bill's terms, which recently obtained the approval of European Parliament lawmakers and is currently being negotiated with EU member states.

The group suggested that European law should confine itself to stating broad principles in a risk-based approach, given the limited understanding of the risks, business models, and applications of generative AI. They proposed the establishment of a regulatory board of experts to oversee and continuously adapt these principles in response to the rapidly evolving technology.

Furthermore, the executives emphasized the importance of collaboration with their counterparts in the United States, as regulatory proposals have also been made in that country. They urged the creation of a legally binding level playing field to ensure fair competition.

Failure to address these concerns and excessive regulatory demands, the group warned, could undermine Europe's international standing and its significance in the global landscape of transformative technologies.

As AI's widespread adoption continues, experts increasingly call for enhanced regulation. The United States and China have also unveiled plans for AI regulation in recent months. Sam Altman, CEO of OpenAI, the company behind ChatGPT, has been advocating for coordinated international regulation during his high-profile trips worldwide.

The EU rules represent the world's first legally binding attempt to regulate various aspects of AI, according to the European Parliament. Negotiators hope to reach an agreement on the AI Act by the end of the year. Once adopted by the European Parliament and EU member states, the act will become law.

The current version of the AI Act prohibits harmful AI systems, including real-time facial recognition in public spaces, predictive policing tools, and social scoring systems akin to those used in China. The legislation also outlines transparency requirements for AI systems, such as disclosing AI-generated content and implementing safeguards against the generation of illegal content.

Non-compliance with the AI Act could result in substantial fines, potentially reaching up to €40 million ($43 million) or 7% of a company's worldwide annual turnover, whichever amount is higher. The penalties will be proportionate, taking into account the market position of small-scale providers, indicating potential leniency for startups.

While some companies, such as SAP and Ericsson, have shown support for the rules, calling them a framework to work with, concerns expressed by the group of business leaders highlight the need for careful consideration and adjustments to ensure Europe remains an attractive hub for AI innovation.

The ongoing debate and collaboration among stakeholders are crucial to strike a balance between effective regulation, safeguarding fundamental rights, and fostering innovation in the field of artificial intelligence.