While this legislation applies only to EU companies, its implications are likely to inspire a broader ripple effect across global brands and retailers, similar to how the EU’s General Data Protection Regulation (GDPR) resulted in a wider change in strategy for brand data policies. While the US has not enacted similar AI legislation, President Biden’s administration has issued an executive order that calls on the federal government to address concerns while fostering US-led innovation.
The AI Act could “potentially raise awareness and instil confidence in the responsible use of AI technology across a broad spectrum of participants within the fashion industry; from designers to manufacturers, retailers, e-commerce platforms, fashion influencers, celebrities, and consumers”, says Hong Shi, counsel at law firm Haynes Boone Hong Kong and co-chair of the firm’s AI practice. “As AI becomes increasingly integrated into various aspects of their operations, the Act is likely to stimulate discussions about ethical AI usage across the various players.”
What brands need to know
The AI Act measures risk in four distinct tiers: unacceptable, high-level, limited and minimal. Anything at the level of “unacceptable” risk is effectively banned, according to the EU. This includes “all AI systems considered a clear threat to the safety, livelihoods and rights of people”, such as biometric surveillance tools; motion recognition in the workplace and schools; social scoring; and predictive policing. Bans will start coming into effect from November.
High-risk AI systems include technology used in employment and the general management of workers. “Hiring decisions that involve the use of AI tech will be subject to strict obligations,” says James Brown, partner at Haynes Boone UK. This will also include CV-sorting systems and other software used for similar purposes, which Brown says will need to be risk assessed with “mitigation systems in place with high levels of robustness, security, and accuracy”.
“Limited risk” includes using AI for marketing, design, manufacturing, retailing processes, trend analysis and personalisation. “Low risk” includes AI-enabled video games or spam filters. These more general-purpose AI rules will apply from March 2025.
There are several implications for fashion, experts say. Brands and retailers that use AI to provide personalised recommendations or styling advice will need to review how that is disclosed to the customer. Clear labels will also need to be applied to any AI-generated content. “It is likely we will see websites, emails, advertisements and other material created containing a disclaimer specifying that the content observed, or platform being utilised, has been developed with AI becoming the norm,” says Brown.